SHABBIR MOHAMMAD SAYED Versus MRS. NOOR JEHAN MUSHTER SHAIKH & ORS

SHABBIR MOHAMMAD SAYED Versus MRS. NOOR JEHAN MUSHTER SHAIKH & ORS

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले



1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.___________ OF 2022
(Arising out of SLP (C) Nos.32161-32162 OF 2018)
SHABBIR MOHAMMAD SAYED …APPELLANT(S)
Versus
MRS. NOOR JEHAN MUSHTER
SHAIKH & ORS. …RESPONDENTS(S)
J U D G M E N T
K.M. JOSEPH, J.
1. Leave granted.
2. By the impugned order, the High Court in a revision
petition filed by the appellant has upheld the order
passed by the Appellate Bench of the Court of Small
Causes at Bombay which in turn affirmed the order
passed in Execution Application No.386/2016 that is
Order dated 16.11.2016, rejecting the application filed
by the appellant under Order XXI Rule 97 of the Code
of Civil Procedure. The application for recall has been
2
rejected by the order which is also impugned. The
first respondent filed a civil suit against respondent
Nos.2-4. Respondent Nos.2-4 are, in other words,
defendants 1, 2 and 3 in the suit. The claim of the
first respondent in the suit was that defendant Nos. 1
and 2 were tenants of the property in question who were
ready to transfer their tenancy rights on the agreed
consideration of Rs. 85,000/- which was paid to them
by the first respondent. The parties are referred to
by their status in the Trial Court. The matter was
being delayed on the basis of the property being
illegally sublet to two persons. The plaintiff is
alleged to have contacted the landlord namely defendant
No.3. The 3
rd defendant transferred tenancy rights by
rent receipt dated 01.12.2006. Possession was not
handed over. PW2, the 3rd defendant, was examined where
he admitted the letters dated 03.1.2004 and 19.05.2007.
The Trial Court dismissed the suit by Judgment dated
09.04.2013. The plaintiff appealed the judgment by
filing Appeal No.23 of 2013. The Appellate Court
decreed the suit. Following are the terms of the
decree:
3
1.Appeal is allowed with costs.
2.The Judgment and decree dated
09.04.2013 is set aside and following
order is substituted.
i) The suit is party decreed with costs.
ii) It is declared that the plaintiff is
tenant in respect of the suit premises being
Room No.3, Ground Floor, 98/A, Visheshwar
Bhuvan @ Rajkotwala Compound, Pipe Road,
Kurla (West), Mumbai 400 070.
iii) Defendant No.3/landlord/co-owner is
directed to hand over possession of the suit
premises to the plaintiff within a month and
directed to issue rent receipt regularly to
the plaintiff after accepting the monthly
rent.
iv) The relief sought vide prayer clause (b)
is rejected.
3. The plaintiff levied execution by filing Execution
Application No.386 of 2016.
4. It is the case of the appellant that the tenant
who was actually in possession of the property assigned
his rights in favour of the appellant by an agreement
dated 24th January 2014. The appellant claims ignorance
of the litigation.
5. In other words, one Akhtar Habibullah Shaikh
claiming to be the lawful tenant of the premises
transferred his rights in favour of the appellant upon
4
receiving of ‘total cost and consideration’ of
Rs.9,40,000. What is more important is the 3rd defendant
(landlord) by agreement of the same date i.e. 24th
January 2014 assigned leasehold right in favour of the
appellant. The appellant came by possession of the
premises. When he came to know of the decree obtained
by the plaintiff and it being put to execution, he
filed application purporting to be under Order 21 Rule
97 of the Code of Civil Procedure. It was this
application which was dismissed by the Execution Court,
the Appellate Court and the High Court.
6. We heard Shri Gauraj Shah along with Mr. Udayaditya
Banerjee, learned counsel on behalf of the appellant
and Shri Sandeep Sudhakar Deshmukh, learned counsel on
behalf of the plaintiff.
7. Learned counsel for the appellant would contend
that none of the grounds arrayed against the appellant
will hold good in law. It is pointed out that the
appellant has been non-suited on the following grounds.
8. The assignment of lease in favour of the appellant
by the person claiming to be the lessee was unlawful,
the lease being contrary to Section 26 of the
5
Maharashtra Rent Control Tenancy Act 1999 (hereinafter
referred as “the Act”). Secondly, it has been found
that the assignment purporting to be made by the 3rd
defendant landlord in favour of the appellant could not
be acted upon as the assignment was not registered. It
was thirdly found that the transactions relied on by
the appellant were afflicted by the bar of Section 52
of the Transfer of Property Act. It was during the
pendency of the appeal filed by the plaintiff which
appeal was later allowed that the assignments relied
on by the appellant came to be made. Learned counsel
would elaborate and contend as follows:
As far as Section 26 of the Act is concerned, the
prohibition therein would not apply if there is a
contract to the contrary. He would rely upon the
Judgment of a full bench of the Bombay High Court
and contend that in the light of the law laid down
therein the bar of Section 26 would not apply. The
next contention is that in Maharashtra, Section 52
has been amended. The substance of the amendment
is that if the party wishes to avail the benefit
6
of the doctrine of lis pendens, he must give a
notice which must be registered in the manner
provided. The plaintiff has no case that such a
notice was given and registered. This would mean
that Section 52 would not apply. Still further even
Order 21 Rule 102 of the Code of Civil Procedure
has been omitted in the State of Bombay. Therefore,
the assignment in favour of the appellant will not
be afflicted with the Bar under Section 52 or Order
21 Rule 102, runs the argument.
As far as the 3rd finding against the appellant
goes, namely, the fact that the lease deeds were
not registered, it is pointed out that the lease
deeds were actually monthly in nature. At any rate
even if lease extends for a period of more than
one year, the appellant stands shielded by virtue
of the provisions of Section 55 of the Act. He
would contend that though a review petition was
filed bringing to the notice of the High Court,
the aspects relating to Section 26 and the
provisions of Section 55, the High Court has
dismissed the review petition as well. He would
7
point out that when a person who is not a party to
the suit or in the execution proceeding is in
possession and has independent rights and is sought
to be dispossessed, under the law as laid down by
this Court, he is entitled to have his right
investigated and adjudicated in the manner
provided in Order 21 Rules 98 and 101. He would
point out that actually the decree obtained by the
plaintiff is collusive in nature. The 3rd defendant
came to be examined by the plaintiff as her witness
namely PW2. The same 3rd defendant came to execute
the agreement on 24th January 2014 in favour of the
appellant.
9. Per contra learned counsel for the plaintiff
supported the impugned Judgment. He would point out
that there is no bona fides in the claim of the
appellant. According to the plaintiff, appellant has
neither any right nor even possession of the property.
10. We have already noticed the facts. Originally the
Trial Court dismissed the suit filed by the plaintiff.
It is after she filed the appeal and during the pendency
of the appeal that the two transactions relied upon by
8
the appellant allegedly came to be entered into. The
transactions are said to be entered into on 24.01.2014.
11. We must first consider whether the said
transactions dated 24.01.2014 said to have been entered
into by the tenant Shri Habibullah is hit by the bar
of Section 26 of the Act. This we do, proceeding on the
basis that it is proved.
Section 26 of the Act reads as follows:
“26: In absence of contract tenant not to
sub-let or transfer or to give on licence
Notwithstanding anything contained in any
law for the time being in force, but
subject to any contract to the contrary,
it shall not be lawful for any tenant to
sub-let or give on licence the whole or
any part of the premises let to him or to
assign or transfer in any other manner his
interest therein:
Provided that, the State Government may
by notification in the Official Gazette,
permit in any area the transfer of
interest in premises held under such
leases or class of leases any premises or
class of premises other than those let for
business, trade or storage to such extent
as may be specified in the notification.”
9
Section 26 begins with a non-obstante clause and
purports to provide for the position despite
whatever is contained in any law for the time being
in force. In this regard, it must be noticed that
the Transfer of Property Act, 1882, in Section 108
(B)(j) provides that in the absence of a contract
to the contrary:
“(j) The lessee may transfer absolutely or
by way of mortgage or sub-lease the whole
or any part of his interest in the property,
and any transferee of such interest or part
may again transfer it. The lessee shall
not, by reason only of such transfer, cease
to be subject to any of the
liabilities attaching to the lease;
Nothing in this clause shall be deemed to
authorise a tenant having an untransferable
right of occupancy, the farmer of an estate
in respect of which default has been made
in paying revenue, or the lessee of an
estate under the management of a Court
of Wards, to assign his interest as such
tenant, farmer or lessee;”
12. Thus, the law giver has provided that,
notwithstanding, the aforesaid provision it will not
be lawful for a tenant to sublet or to give on license
the whole or any part of the premises let to him or to
assign or transfer in any other manner his interest
10
therein. This in turn is, however, made subject to any
contract to the contrary. In other words, while under
the general law, subject to there being no contract to
the contrary, a tenant can assign, sublease or mortgage
his rights as lessee, on the other hand, in regard to
a tenancy governed by the Act, the ordinary rule is
that a tenant cannot sublet, give on licence or assign
or transfer in any other manner. This is made subject
to a contract to the contrary. The assignment relied
upon by the appellant namely by alleged lessee on
24.01.2014 would be illegal on the face of it unless a
contract to the contrary is established. It is in this
regard that learned counsel for the appellant would
draw support from the action of the admitted landlord
namely, the defendant no.3 who has purported to enter
into the assignment in favour of the appellant on the
very same day. In this regard, our attention is drawn
to the Judgment of the full bench of the Bombay High
Court. Therein speaking on behalf of a Full Bench in
2004 (2) Maharashtra Law Journal 305 R.M. Lodha,J as
His lordship then was, inter alia, dealing with Section
26 held as follows:
11
“15. The said section 26 does not absolutely
prohibit or totally forbid the tenant the
tenant as meant by section 7(15) - to sublet
or give on licence or assign or transfer in
any other manner whole or any part of the
premises let to him since it is subject to the
contract to the contrary with the landlord. In
other words, the landlord is always at liberty
to permit the tenant to sublet or give on
licence or assign or transfer in any other
manner whole or any part of the premises let
to him. The contract contrary to the
prohibition provided in section 26 can be at
any time at the time the premises are let out
to the tenant or any time thereafter, even
after the tenant has sublet or given on licence
or assigned or transferred his interest in the
premises let out to him. The landlord can
always ratify the action of the tenant in
subletting or giving on licence or assigning
or transferring in any other manner his
interest in the premises let to him. Thus,
section 26 of the Act of 1999 cannot be held
to contain the absolute bar against the tenant
of the non-residential premises nor the
transfer in contravention of section 26 is
absolutely void that is void against the whole
world but may be void against the landlord
furnishing him the ground to get a decree for
ejectment.”
13. The next aspect which is canvassed by the appellant
is about the inapplicability of Section 52 of the
Transfer of Property Act as an absolute bar or rather
12
the effect of lis pendens as obtaining in Bombay. It
is pointed out that Section 52 has a modified
application in the area in which the premises in
question is situated. In regard to this area by virtue
of Bombay Amendment Act, 1939 (Act XIV of 1939), being
enacted, Section 52 reads as follows:
“52. (1) During the pendency in any court
having authority within the limits of India
excluding the State of Jammu and Kashmir
established beyond such limits by the
Central Government, of any suit or
proceeding which is not collusive and in
which any right to immovable property is
directly and specifically in question, if a
notice of the pendency of such suit or
proceeding is registered under Section 18
of the Indian Registration Act, 1908, the
property after the notice is so registered
cannot be transferred or otherwise dealt
with by any party to the suit or proceeding
so as to affect the rights of any other party
thereto under any decree or order which may
be made therein, except under the authority
of the court and on such terms as it may
impose.
(2) Every notice of pendency of a suit or
proceeding referred to in sub-section (1)
shall contain the following particular,
namely: -
(a) the name and address of the owner of
immovable property or other person whose
right to the immovable property is in
question;
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(b) the description of the immovable
property the right to which is in question;
(c) the Court in which the suit or
proceeding is pending;
(d) the nature and title of the suit or
proceeding; and
(e) the date on which the suit or proceeding
was instituted.
Explanation.--For the purposes of this
section, the pendency of a suit or
proceeding shall be deemed to commence from
the date of the presentation of the plaint
or the institution of the proceedings in a
Court of competent jurisdiction, and to
continue until the suit or proceeding has
been disposed of by a final decree or order
and compete satisfaction or discharge of
such decree or order has been obtained, or
has become unobtainable by reason of the
expiration of any period of limitation
prescribed for the execution thereof by any
law for the time being in force."
Adverting to the said provision, a division bench of
the High Court of Bombay has held as follows interalia
in the Judgment reported in (2016) Vol.6 Bombay CR 262:
“58. Section 2 of the Bombay Amendment Act
XIV of 1939 provides that the Amendment Act
shall apply to properties situated wholly
or partly in the City of Bombay (now
Mumbai) from the date of notification in
the official gazette (which has been
issued) and provides for similar
notification extending applicability of
14
the Amending Act to other areas to be
issued (which is not shown to have been
issued). Thus, the amended provisions apply
to properties in Mumbai and the unamended
section applies to rest of the State.”
(Emphasis supplied)
14. It is the case of the appellant that the premises
in dispute is located within the scope of the amended
law. In view of the same, it is contended that the bar
of Section 52 will not apply. When questioned as to
whether the appellant had a case that the plaintiff had
not given a notice and got it registered under Section
52, the answer is that the plaintiff does not have a
case of having given any notice. It is actually a
question of fact whether the premises is located in the
area covered by the Amendment to Section 52. It is
further a question of fact as to whether a notice was
given.
15. As regards the lease not being registered, the
contention of the appellant is premised on Section 55
of the Tenancy Act. In other words, it is contended
that Section 55(2) of the Act clearly places the
responsibility of getting the lease registered on the
15
landlord. The failure of the landlord to get the lease
registered would entitle the tenant to establish the
tenancy with the document even if it is not registered.
Section 55 of the Act reads as follows:
“55. Tenancy agreement to be compulsorily
registered.
(1) Notwithstanding anything contained in
this Act or any other law for the time being
in force, any agreement for leave and
license or letting of any premises, entered
into between the landlord and the tenant or
the licensee, as the case may, after the
commencement of this Act, shall be in
writing and shall be registered under the
Registration Act, 1908.
(2) The responsibility of getting such
agreement registered shall be on the
landlord and in the absence of the written
registered agreement, the contention of the
tenant about the terms and conditions
subject to which a premises have been given
to him by the landlord on leave and license
or have been let to him, shall prevail,
unless proved otherwise.
(3) Any landlord who contravenes the
provisions of this section shall, on
conviction, be punished with imprisonment
which may extend to three - - months or with
fine not exceeding rupees five thousand or
with both.”
16
16. The appellant has not raised any contention based
on the amended Section 52 before the Execution Court.
Even in the appeal before the Appellate Court, the
appellant has not contended that a Notice was required
under Section 52, as applicable. Before the High Court
in the Revision, it is not seen expressly contended.
It is in the recall application that an effort is made
in this direction. The amended provisions of Section
52 of the Transfer of Property Act are inapplicable for
the whole of Maharashtra, as found by the High Court
itself in the decision relied upon by the appellant,
it is applicable to certain area. The applicability of
the amended provisions of Section 52, thus, became a
question of fact.
17. As far as the alleged assignment by the so-called
tenant in favour of the appellant is concerned, it is
prohibited under Section 26. There is no express
contract to the contrary to rescue the appellant. The
full bench of the High Court of Bombay in the decision
relied upon by the appellant was actually dealing with
the question whether the interest of the tenant could
be attached and sold. No doubt, it has also held that
17
there could be ratification by the landlord even after
the transfer by the tenant.
18. In the Indian Contract Act, 1872, Chapter X deals
with Agency. In Chapter X, Sections 196 to 200 provide
for ratification. Apparently, the Sections embody
general principles relating to ratification and we can
safely apply the principles embodied in the Sections
essentially dealing with relationship between a
Principal and his Agent.
19. As to what is ratification, has been articulated
in Section 196. It reads as under:
“196. Right of person as to acts done for him
without his authority
Effect of ratification. - Where acts are done
by one person on behalf of another, but without
his knowledge or authority, he may elect to
ratify or to disown such acts. If he ratifies
them, the same effects will follow as if they
had been performed by his authority.”
20. In the work “The Indian Contract Act and Specific
Relief Acts” by Pollock and Mulla (14th Edition), the
learned authors have stated thus:
“Ratification
An act which, at the time it was entered
into or done by an agent, lacked the
18
authority, express or implied, of a
principal, may, by the subsequent conduct of
the principal, become ratified by him under
certain circumstances, and made as
effectively his own as if he had previously
authorised it. Ratification can be express
or implied from conduct, and it will be held
adopted throughout.
XXX XXX XXX
Ratification differs from consent. Consent
is an express or implied agreement to waive
the right to avoid an act, and precedes the
transaction. Ratification is subsequent in
point of time to the transaction which is
voidable. Where acquiescence is made when
the act to be ratified is in progress, it is
consent; where it is done after the act is
completed, it is ratification.”
(Emphasis supplied)
21. We may notice Section 198 of the Contract Act. It
reads as under:
“198. Knowledge requisite for valid
ratification
“No valid ratification can be made by a
person whose knowledge of the facts of the
case is materially defective.”
22. Pollock and Mulla, in their work “The Indian
Contract Act and Specific Relief Acts” have further
stated thus:
19
“Effective ratification necessarily
involves knowledge of all the material facts
on the part of him who ratifies: i.e. the
person ratifying should be conscious that
the act beyond the authority of the agent
had been done, and after notice of that
fact, he consciously, by an overt act,
agreed to be bound by it or by acquiescence
in the situation arising thereafter, allowed
the business to continue.
xxx xxx xxx”
23. Therefore, the core principle of ratification is
one by which a person approves of the act of another
knowing about the act.
24. Thus, an assignment by the tenant can be ratified
by the landlord. In this case however there is no
ratification in the alleged agreement executed by the
3
rd defendant landlord. He does not even refer to the
alleged agreement executed by the tenant in favour of
the appellant. Ratification is an act which presupposes
knowledge of the act of the person whose act is sought
to be ratified. A perusal of the alleged agreement
executed by the landlord would reveal that it makes no
reference to the alleged agreement executed by the
tenant in favour of the appellant. The third defendant
20
had proceeded to allegedly execute the agreement
purporting to create interest in his own right.
Therefore, we are of the view that even proceeding on
the basis of the principle laid down by the full bench
of the High Court of Bombay, in the facts of this case,
there is no ratification. Sans any ratification and in
the absence of any contract to the contrary within the
meaning of Section 26, the alleged transfer by the
‘lawful tenant’ cannot pass muster.
25. As far as the case based on the alleged Tenancy
Agreement dated 24.01.2014 between the third respondent
and the appellant, we may notice certain features. As
already noticed, agreement by the so-called tenant in
favour of the appellant was also executed on the same
day. In the Agreement executed by the tenant on
24.01.2014, the tenant states that he is the lawful
tenant and that he is staying in the said premises and
the tenancy is created in consideration of
Rs.9,40,000/- being paid. In Clause (3) of the
Agreement, the tenant has purported to hand over vacant
possession of the premises to the appellant. In fact,
it is stated that the assignment will be “forever”. In
21
the alleged tenancy agreement between the third
respondent and the appellant executed allegedly on the
same day it is recited that the premises is in the
actual physical possession of the landlord and on a
consideration of Rs.175/- per month, tenancy was
created in his favour. The case of the appellant which
is based essentially on the appellant having paid
Rs.9,40,000/- to the ‘lawful’ tenant having found to
be untenable being illegal as violative of Section 26
of the Act is in direct conflict with the case set up
by the appellant regarding the tenancy with the third
respondent. We have already found that the case of the
landlord having ratified the tenancy of the appellant
with the tenant cannot stand scrutiny of the Court.
The acceptance of the case by the appellant involves
harmonizing of an irreconcilable contradiction as
regards the principal recital, namely, the case as to
the emanation of possession. If the case of the
appellant is accepted it is the tenant who was in
possession and who handed it over having received a sum
of Rs.9,40,000/- which is essentially the case set up
in the Execution Court. Noticing no doubt, that the
22
documents have not yet been proved and taking the
documents on their face value, yet the conclusion is
inevitable that the case set up by the appellant on the
basis that the landlord was in possession is in the
teeth of agreement of the same day with the tenant who
claims that he was in possession and it does not appeal
to us as anything but incongruous to say the least. In
fact, in his application, before the Execution Court
the specific case set up by the appellant is that he
was put in possession by the alleged lawful monthly
tenant. The case set up by the appellant based on the
tenancy agreement by the landlord cannot be acted upon.
26. The matter can be looked at from a different
perspective as well. The appellant lays store by a
tenancy or assignment by the ‘lawful tenant’ on
24.01.2014. This involves the assumption that the
tenancy in favour of the lawful tenant was intact. If
so, how can the landlord create a tenancy in favour of
the appellant without extinguishing the existing
tenancy with the ‘lawful tenant’? The case of the
appellant defies both logic and is legally untenable.
It becomes unnecessary to even explore the argument of
23
the appellant that the suit being collusive, the courts
query as to the impact of the transfer in favour of the
appellant being later in point of time must stand
overwhelmed would stand answered.
27. We would therefore think that the appellant has
not made out a case for interfering with the impugned
judgments. The appeals are dismissed. No order as to
costs.
………………………………………………………J.
[ K.M. JOSEPH ]
………………………………………………………J.
[ HRISHIKESH ROY ]
NEW DELHI
DATED; AUGUST 02, 2022

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