Supreme Court Ruling on the Registration of Lease Deed and its Impact Post COVID-19

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One most common legal remedy adopted by the tenants during these unprecedented times has been the invocation of the ‘Force Majeure‘ clause, in the lease deeds. However, at this stage, it is to be noted that a non-registered lease deed may have legal consequences for both the landlord and tenant, during COVID-19 times.

The Supreme Court in a recent landmark judgment titled as Siri Chand (deceased) thr. Lrs. v. Surinder Singh,has dealt with an important aspect pertaining to the requirement of compulsory registration of a rent/lease deed for immovable property.

The moot question before the Hon’ble Supreme Court was “Whether the rent/lease deed in the instant case needed to be mandatorily registered as under Section 17(1)(d) of the Registration Act of 1908”.

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The Registration Act, 1908,2 requires mandatory registration of a lease deed pertaining to an immovable property let out (i) from year to year; or (ii) for any term exceeding one year; or (iii) reserving a yearly rent. The Supreme Court, after taking note of the provision, had observed that lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, requires compulsory registration.

The Supreme Court further noted that based on the provisions of Transfer of Property Act, 1882 and Rule of Construction, when a rent/lease deed does not provide for a period agreed on between the parties, then in such a scenario, it will be presumed that the lease deed is for a lease of immovable property, on a monthly basis.

Hence, based on the above provisions, the Supreme Court held that when the rent/lease deed does not mention the period of the tenancy or other conditions of the rent/lease deed, in all such cases, it will be assumed that the rent/lease deed is on a monthly basis and the rent/lease deed shall not be compulsorily registrable under the Registration Act, 1908.

The Implication of the Supreme Court’s Decision in Siri Chand

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The Siri Chand judgment would bring a ray of hope for landlords during the unfortunate pandemic hour, where they are grappling to recover rents from tenants. The judgment is bound to impact those tenants, who are resorting to legal measures for waiver/suspension of rent as avoidance tactics for paying rent. Further, such tenants may also raise technical grounds against eviction; such as the one dealt by the Supreme Court in the Siri Chand Judgement, regarding, non-registration of rent/lease deed as per the Registration Act, 1908.

Interestingly, the Delhi High Court in a recent plea filed by a tenant for waiver of rent,3 has already ruled that in case the lease deed expressly mentions the Force Majeure clause then in all such cases, the tenant may claim the contract to be void, and resultantly surrender the premises to the Landlord. However, if the tenant wishes to retain the premises and there is no Force Majeure clause in the agreement, the tenant can delay in paying the rent. In light of the lockdown and COVID-19, however, the tenant cannot seek for waiver of rent in such situations.

Conclusion

The Supreme Court in Siri Chand judgement clarified the position of law that in cases where lease agreement does not provide for the duration of the tenancy, it is not required to be registered under the provisions of the Registration Act. Further, in absence of any specification regarding the duration of the tenancy, the presumption may be made that the tenancy was of monthly nature. Similarly, the Delhi High Court in Ramanand case as mentioned above, tried to delve into the legal position of the Force Majeure clause as in rent/lease deeds, helping in resolving few grey areas for both tenants and landlords.

1 Civil Appeal no. 2617 of 2020 decided 20.06.2020.

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2 Section 17(1)(d) of the Registration Act 1908.

3 Ramanand and Ors. v. Dr Girish Soni and Anr. decided on 21.05.2020.


 

Prateek Kumar is a partner at Chambers of Jain and Kumar. The firm is a full-service law firm located in the heart of Delhi with a network of lawyers across the country.

Prateek is an Alumni of Amity Law School, Delhi, Indraprastha University, enrolled with the Bar Council of Delhi in the year 2016. He is a lawyer with expertise in the laws relating to Criminal Law, Arbitration laws, Insurance Laws, Banking laws and Intellectual Property Rights. His area of practice has largely been the Delhi High Court, District Courts of Delhi and various Tribunals, wherein several of his judgements have been reported.

In the past, he has worked in a tier-one Intellectual Property Law Firm and subsequently, with a former Special Public Prosecutor of CBI before the Hon’ble Delhi High Court. He is also a member of Delhi High Court Bar Association.

You can reach him out at [email protected]


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Chambers of Jain and Kumar
Chambers of Jain and Kumar is a full-service law firm located in the heart of national capital. Our primary aim is to provide suitable legal solutions for matters that concern individuals and business establishments. Our aim is to implement customised legal solutions with complete personal attention and provide the finest end-to-end services to meet our clients’ needs. We value the trust our clients place in us and work hard to provide solid and effective representation to meet their diverse legal needs. Our aim is to ensure effective and efficient redressal for our clients in the most prudent and cost-effective way.
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