TaxTMI 
TaxTMI 
2016 (5) TMI 642
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.... for recovery of about Rs. 23 lacs in a mortgage suit filed by the appellant. After the first respondent purchased the property at the auction, it was handed over the possession of the property. However, the appellant refused to handover portion of the property claiming that it was in possession thereof as a tenant. Admittedly, the appellant at whose instance the property was brought to sale in execution proceedings did not disclose in the proclamation or otherwise and at any time prior to the sale that it claimed to be in possession of a part of the property as a tenant. 3. The question, therefore, is whether the first respondent is entitled to possession of the entire property including the portion in respect of which the appellant claims to be a tenant. The learned Judge held that the appellant is a tenant but held that it was estopped from setting up its claim as a tenant as it had failed to disclose its interest as such while bringing the property to sale in the execution proceedings. The appeal is against the latter finding. The first respondent has filed cross objections challenging the finding that the appellant is a tenant in respect of a portion of the property. We hav....
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....cree as having provided that the sale proceeds would be paid in Court and would be applied towards the payment of the decretal amount and other costs, charges and expenses as may be payable under Order 34 Rules 10 and 11 of the Code of Civil Procedure, 1908 and that the balance would be paid to the official liquidator. To reiterate, therefore, the proclamation did not mention a word about the appellant's alleged claim as a tenant in respect of a part of the property and it referred to the sale being governed by the provisions of the Code of Civil Procedure. 7. The property was thereafter auctioned by the Executing Court. The first respondent purchased the same on 12.09.1988 for a sum of Rs. 16,50,000/-. The sale was confirmed by the Court on 03.11.1988 and on 08.02.1990 a certificate of sale was ordered to be issued to the first respondent. The sale certificate was thereafter issued on 26.08.1991. The first respondent filed Company Appeal No. 168 of 1991 which was disposed of with an order directing the official liquidator to deliver the possession of the property within three weeks from 31.10.1991. 8. The official liquidator, however, reported that the appellant was in posse....
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....t. 13. Referring to the judgment of the Supreme Court in Dr. H.S.Rikhy v. The New Delhi Municipal Committee AIR 1962 SC 554, the learned Judge rightly held that mere payment of rent does not create a relationship of landlord and tenant and that the relationship of landlord and tenant comes into existence only when there is an intention to create a demise in the property. The Supreme Court held as follows:- "It was also contended that it was admitted by the respondent that rent was received and receipts for rent were granted by its agents. The use of the word "rent' is, not conclusive of the matter. It may be used in the legal sense of recompense paid by the tenant to the landlord for the exclusive possession of premises occupied by him. It may also be used in the generic, sense, without importing the legal significance aforesaid, of compensation for use and occupation. 'Rent' in the legal sense can only be reserved on a demise of immovable property. Reference may be made in this connection to paragraphs II 93 and 11 94 of Halsbury's Laws of England (Third Edition, Vol. 23) at pages 536-537. Hence, the use of the term 'rent' cannot preclude the landlo....
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....ondent No.2 for coming to the conclusion that there was a demise of the property by the company in favour of the appellant and that there existed a relationship of landlord and tenant between them. Needless to add that the first respondent was not a party to this correspondence. The correspondence relied upon is as follows:- A) The Company's Managing Director addressed a letter to the appellant stating that the construction of a room had reached the roof level and that it had stopped work for want of funds and would commence the same after release of the first running payment as per its request contained in its letter dated 22.09.1971. (B) By a letter dated 15.11.1971 the company asked the appellant to make an application to the Haryana State Electricity Board for a connection. (C ) By a letter dated 19.01.1974 addressed to the appellant, the Chairman of the company stated that the appellant had not replied to its letter and that from its silence in the matter it was assumed that the appellant had no objection to and had agreed to the 'increased rent of Rs. 1250/- per month'. The letter further stated that henceforth the company would be charging from the....
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....p of landlord and tenant and that the question depends upon whether there was a relationship of landlord and tenant. 20. Nothing was brought on record to indicate the creation of a tenancy. The evidence does not even indicate when the tenancy came into existence. Nor are there are any particulars or details about the creation of a tenancy. 21. The appellant examined four witnesses. PW1 was the Manager of the branch which was established on 27.12.1971. He identified the signatures on the Account Opening Form of the company. He deposed that the appellant was paying Rs. 850/- per month. He, however, does not mention the nature of the payment. In other words, he did not depose that the amount of Rs. 850/- per month was paid as rent. In his cross examination he stated that he had seen a proposal of settlement of rent between the bank and the company but admitted that he had not sanctioned the rent and that he had not seen the lease deed. He also admitted that he did not know the terms and conditions of the lease except as to the rent. He was unable to give any particulars in respect thereof. He confirmed that he did not recollect the terms and conditions. 22. This witness's evi....
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....t passing of a resolution by the board of the appellant and of the company was not mandatory for the creation of a tenancy. However, the absence of such a resolution is a factor that militates against the creation of tenancy. Moreover, there was no agreement creating tenancy. This by itself may not militate against the existence of a tenancy. However, considered in addition to the other facts and circumstances, it is a factor that belies the existence of the tenancy. 28. There is an even more important fact that militates against the appellant's case of it being a tenant. The appellant never mentioned in the course of proceedings that it was a tenant. It never even referred to the tenancy. It is only when the first respondent after purchasing the property sought possession of the premises that the appellant for the first time contended that it was a tenant. We will for the present ignore the first respondent's contention that the appellant is not entitled to raise a defence of tenancy in view thereof. However, the appellant not having referred to the tenancy at all material times indicate as a matter of fact that its possession of the premises was not as a tenant thereof. This i....
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.... appellant failed to disclose the same even in the proceedings relating to the execution of decree No. 21/L/97 taken out by it. Rules 13 and 66 of Order 21 of the Code of Civil Procedure read as under:- "13. Application for attachment of immovable property to contain certain particulars:- Where an application is made for the attachment of any immovable;; property belonging to a judgment-debtor, it shall contain at the foot- (a) a description of such property sufficient to identify the same and, in case such property can be identified by boundaries or numbers in a record of settlement or survey, a specification of such boundaries or numbers; and (b) a specification of the judgment-debtor's share or interest in such" property to the best of the belief of the applicant, and so far as he has been able to ascertain the' same. 66. Proclamation of sales by public auction:- (1) Where any property is ordered to be sold by public auction in execution of a decree, the Court shall cause a proclamation of the intended sale to be made in the language of such Court. (2) Such proclamation shall be drawn up after notice to the decree hol....
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.... (c). There, can, however, be no doubt that the proclamation ought to have specified fairly and accurately the tenancy in view of Order 21 Rule 66 (2) (e) which requires every other thing which the Court considers material for a purchaser to know in order to judge of the nature and value of the property to be specified. Clause (e) is of the widest amplitude and everything which affects the value of the property must be specified/disclosed. It can hardly be suggested that the value of a property is not affected by a tenancy created in respect thereof. The value of a property with a sitting tenant can never be the same as its value without a tenant. It is axiomatic, therefore, that clause (e) of Rule 66 (2) requires a proclamation to specify a tenancy in respect of a property to be sold in auction. Any Court would consider a tenancy to be a material thing/aspect for a purchaser to know in order to judge the value of the property to be sold in auction. We will assume that the clause requires a proclamation to specify only things that affect the monetary value of the property and not any special value in respect thereof. In the present case that would makes no difference. A tenancy sub....
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....d if we are not to assume mala fides on the part of the appellant bank, it would follow that had the appellant actually been a tenant of the property it would have disclosed the same. That it did not do so is a strong indication that it was not a tenant. 36. If on the other hand we are not to assume bona fides in favour of the appellant it would follow that the appellant deliberately withheld the fact of tenancy and that brings us to issue No.2. 37. In the circumstances, the decision of the learned Judge on issue No.1 is over-ruled. Issue no.1 is answered in favour of the first respondent and against the appellant. Re; Issue No.2 38. All that we said while dealing with issue No.1 must be reiterated while considering issue No.2. 39. The submission that the proclamation under sub rule (2) of Order 21 Rule 66 is to be drawn up by the Court and not by the decreeholder and, therefore, the decree-holder such as the appellant cannot be held responsible for anything stated or omitted to be stated therein is not well founded. Sub rule (2) of Rule 66 cannot be read in isolation. It must be read inter-alia with sub rule (3) of Rule 66. It requires the application for an order f....