A Supreme Court bench of Justices Ashok Bhushan, M.R. Shah and V. Ramasubramanian in the case of Siri Chand (deceased) Thr. LRs. v/s Surinder Singh held that a mere clause which binds the tenant to pay an additional percentage of rent every year, cannot be interpreted as a tenancy of more than the specified time in the deed.
The court was deciding a case where the landlord and the tenant entered into an agreement of Rs. 2000/- to be deposited by the 5th of every month, defaulting on which would give the landlord the liberty to get the premises vacated. The tenant also undertook to make the payment of rent money by increasing 10% each year. An application under section 13 of East Punjab Urban Rent Restriction Act, 1949 was filed by the landlord, praying for eviction of the tenant along with arrears of rent and house tax and interest on the arrears of rent. The tenant filed objections and contended that the rate of rent is Rs. 1,000/- per month. He also stated that signatures were obtained on some blank papers as security by the landlord, which appears to have been fabricated as alleged rent note. The Rent Controller held that the tenant was in arrears of rent and house tax so the tenant was to be evicted from the premises. When the matter went into appeal, the Appellate Court held that the clause regarding 10% yearly increase cannot be relied upon and the earlier judgment was accordingly set aside. The landlord then went to High Court where the appeal of the landlord was dismissed. The landlord finally appealed to the Supreme Court. The Court held that the contingent clause 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 notice. The 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 cannot be read to mean that the tenancy was for a period of more than one year.