RE: Legal Opinion regarding renewal of Lease Agreement of the premises of Bank 1.
We refer to your letter no. …………………… dated 04 February 2007 on the above subject.
From your letter and the provided documents it appears that Bank 1, (“BANK 1”) had executed leased agreement Dated May 01, 1998 with Mr. x (“the Lease Agreement”) for the lease of the premises situated at ………………… The Lease Agreement expired on 31.03.2006. The owner of the premises requested BANK 1 to renew the Lease Agreement.
In the meantime, Bank 2 (“BANK 2 ”) vide their letter dated 10.04.06 informed BANK 1 that Mr. x, the owner of Taranga complex, entered into a contract on 24.12.1988 with BANK 2 for the sale of the said Complex and handed over possession of the Complex to BANK 2 . BANK 2 also stated that as Mr. x did not execute registered deed in favour of BANK 2, BANK 2 had filed suit for Specific Performance of the Contract against Mr. x in the Court which according to BANK 2 is in its final stage. BANK 2 also informed BANK 1 that according to them they have a fair chance of success and has requested BANK 1 not to enter into any lease contract with Mr. x.
When BANK 1 informed Mr. x about BANK 2’s letter, he informed BANK 1 vide his letter dated 9 September,2006 that although he had executed an agreement with the former BCI, it was cancelled due to nonfulfilment of the terms and conditions of the contract. He also stated that no possession of the property has been delivered to BANK 2 and BANK 2 are still tenant on monthly basis and he has filed written statement to contest the suit.
BANK 1 has not been paying any monthly bill since May, 2006. BANK 1 also has not received any kind of Court’s Order restraining BANK 1 from renewing the Agreement.
In these circumstances, you have requested us to give our legal opinion as to whether BANK 1 may renew the Lease Agreement for a further period with Mr. x and pay monthly rent to Mr. x at this stage.
From perusal of the provided documents it is apparent that although there was a contract between BANK 2 and Mr. x on 24.12.1988, by which Mr. x agreed to sell Taranga Complex to BANK 2 , Mr. x has not executed registered deed in favour of BANK 2 till today.
According to Section 54 of the Transfer of Property Act 1882, transfer of a tangible immovable property can only be made by a registered instrument. And it is also stated in that section that, a contract for the sale of immovable property is a contract that a sale of such property shall take place on the terms settled between them; it does not, of itself create any interest in or charge on such property.
In our opinion, as no registered deed has been executed by Mr. x in favour of BANK 2 , there has been no transfer of Taranga Complex to the name of BANK 2 . Although BANK 2 had filed suit for Specific Performance of the Contract against Mr. x in the Court, BANK 1 has not received any Court Order restraining them from renewing the Lease Agreement.
Therefore, Mr. x is still the legal owner of Taranga Complex. Provided BANK 1 has not received any Court Order till date, BANK 1 may renew the lease Agreement for a further period. However, be advised that BANK 1 should pay to Mr. x any remaining rent owed to him.
If you have any further query, please do not hesitate to contact the undersigned.
For: “The Lawyers & Jurists”