It is often noticed that parties to the Lease Deed do spend most of their time negotiating the terms of the lease deed viz., lock-in-period, renewal, consideration etc., but often tend to miss out on the registration of the same. It is the law under Section 107 of the Transfer of Property Act, 1882 read with Section 17 of the Registration Act, 1908 to compulsorily register the Lease Deeds, lest they will not be classified as evidence admissible under the Indian Evidence Act, 1872 for the purpose of adjudication. But there are limited instances where the Apex Court retracted from the standards laid down by the law and have admitted unregistered Lease Deed as evidence.
In the case of Burmah Shell Oil Distributing now known as Bharat Petroleum Corporation Limited v. Khaja Midhat Noor and Others, (AIR 1988 SC 1470) it was held that the lease shall be deemed to be “lease from month to month” and is covered under Section 106 of the Transfer of Property Act, 1882.
In the year as early as 2000, in the case of Anthony v. K.C. Ittoop and Sons,(2000) 6 SCC 394, it was held that though the Court is disabled from using the unregistered lease deed as evidence, that does not exhaust the scope of deciding on whether there is lessor-lessee relationship between the parties which is formed under Section 105 of the Transfer of Property Act, 1881.
Further it was reiterated in Park Street Properties Pvt. Ltd. v. Dipak Kumar Singh (2016) 9 SCC 268 that in the absence of a registered instrument, the courts are not precluded from determining the factum of tenancy and the nature and character of possession from the other evidence on record as well as the conduct of the parties.
In the case of M/s Paul Rubber Industries Private Limited v. Amit Chand Mitra and Anr., (2023 SCC OnLine SC 1216), the Apex Court put a bar on the usage of unregistered Lease Deed and held that nature and character of possession contained in the unregistered instrument in terms of Section 107 of Transfer of Property Act, 1882 and Sections 17 and 49 of the Registration Act, 1908 can be used as evidence only when the “nature and character of possession” does not constitute the primary dispute for adjudication by the Court. Since, in the instant case, the question was whether there was a lessor-lessee relationship between the Appellant and Respondents, the Supreme Court declined to adduce weightage to the unregistered Lease Deed.
Wherefore, the Supreme Court in Paul Rubber case has reaffirmed the limited operation of the unregistered Lease Deeds in the adjudication of the dispute, lest the rights/interests shall be crystallized erroneously