Civil Revision No.2531 of 1994 (O&M) -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
Civil Revision No.2531 of 1994 (O&M)
Date of decision: 04.03.2009
Municipal Committee, Ambala City through its Administrator
.............. Petitioner
Vs.
Rajinder Kumar Bansal and others ............Respondents
2. Civil Revision No.2677 of 1994 (O&M)
Louis Club Ambala through Deputy Commissioner, Ambala and
others
.............Petitioners
Vs.
Rajinder Kumar Bansal and others ............Respondents
Present: Mr. S.K. Garg Narwana, Addl. A.G., Haryana and
Mr. Deepak Girotra, AAG Haryana
for the petitioner.
Mr. C.B. Goel, Advocate with
Mr. M.K. Bansal, Advocate.
for respondent Nos.1 to 3.
Mr. Sunil Kumar, Advocate
for respondent No.5.
CORAM: HON'BLE MR. JUSTICE K. KANNAN
1. Whether Reporters of local papers may be allowed to see
the judgment ? Yes
2. To be referred to the Reporters or not ? Yes
3. Whether the judgment should be reported in the Digest? Yes
-.-
K.KANNAN, J.
I. Array of parties:
1. The above revision petitions arise out of the common
judgment in Rent Appeals No.28 and 29 of 1991. The appeals before
the Appellate Authority arose out of the judgment rendered in the rent
Civil Revision No.2531 of 1994 (O&M) -2-
application No.212/2 of 1980 by the Rent Controller, Ambala City.
The petitions had been filed by the persons claiming to be legal
representatives of the original owner, one Bhagwan Dass, who held
occupancy rights in respect of the land in question. The rent petition
had been filed against the Louis Club, Ambala through the Deputy
Commissioner, the Deputy Commissioner and the State of Haryana,
Chandigarh represented by the Secretary who were arrayed as
respondent Nos.1 to 3. They were the appellants in Rent Appeal
No.28 of 1991 and the revision petitioners are in C.R. No.2677 of
1994. The respondent Nos.4 and 5 before the Rent Controller had not
preferred any appeal either before the Appellate Authority or revision
petition before this Court. The 6th respondent, who represented the
Municipal Committee, Ambala City was the appellant in Rent Appeal
No.29 of 1991 and the revision petitioner is in C.R. No.2531 of 1994
before this Court.
II. Background facts:
2. Now to certain facts; one Telu Ram was alleged to be the
original owner of the property under whom Bhagwan Dass held
occupancy rights under the Punjab Tenancy Act, 1887. The latter had
executed a gift deed in favour of the 1st respondent-Louis Club on
16.01.1909 for the purpose of running a club only after construction
of building thereon in respect of the land bearing Khasra No.770
comprising 15 bighas and 12 biswas and property in Khasra No.771
comprising of 0 bighas 8 biswas and in all 16 bighas. It appears that
the donor had doubt about his own right to make a gift deed of
property in which he held only an occupancy right and therefore, a
Civil Revision No.2531 of 1994 (O&M) -3-
lease deed was made on 03.03.1909 in favour of the 1st respondent in
supercession of the earlier document. It was stipulated that the
respondent No.1 shall pay Rs.10 per year by way of rent besides land
revenue. It was a permanent lease and the property was stipulated to
be used for the purpose of a club and also gave the power to the lessee
to construct a pavilion in order to run the said club. It was agreed that
if the club was wound up or discontinued or was not used for the
purpose of the club, the property would revert to the lessor without
any further hindrance on the part of the 1st respondent.
III. Stipulated user for club purposes, not breached:
3. It is not denied by either of the parties that a building had
been constructed and the property was used for the purpose of club
only. The lease deed also contained other provisions in the nature of
convenants of both parties as to the nature of the user and the
contingencies that would give the right to the lessor to resume
possession.
IV. Subsequent transactions by tenant-genesis of dispute:
4. The contention of the petitioners was that the 1st respondent
and the State functionaries, who were respondent Nos.2 and 3 created
a sub-lease in respect of the premises in favour of the 4th respondent
namely Lady Tandon Club represented through the Secretary and the
President who were described as respondent Nos.4 and 5. Yet another
portion of the property was said to have been transferred by the 1st
respondent to the Municipal Committee arrayed as the 6th respondent.
The 6th respondent, it was alleged had changed the user of property
and started sinking tubewell for the use of the residents of the town.
Civil Revision No.2531 of 1994 (O&M) -4-
Under the circumstances, the petitioners claiming to be landlords
sought for ejectment of the respondents on the grounds: (i) that the
respondents had failed to pay the rent (ii) that the respondent Nos.1 to
3 had sublet the premises without the consent of the landlord (iii) that
the property had been abandoned by the 1st respondent itself which
had ceased to exist and that the premises were now being used for
offices of different departments like the Rifle Club etc. and (iv) that
the user of the property had been perverted to uses not authorized.
The tenants had changed the user of the property by giving it to the
other departments namely respondent Nos.4 and 5 as well as to
respondent No.6 who were putting the property to use inconsistent
with a specific user stipulated under the documents. Such user,
according to the landlord, had resulted in impairment of value and
utility of the part of the land and hence, the respondents were liable
for eviction.
V. The multifaceted defence:
5. All the respondents except respondent Nos.4 and 5 joined
issues with the petitioners and every one of the contentions raised.
Respondent Nos.1 to 3 stated at the outset that the property was not a
“rented land” and the property being the subject of a gift to the 1st
respondent had never been used for business and commercial purpose.
The subject matter of property and the mode of user authorized under
the gift deed and later under the lease deed did not conform to the
definition of “rented land” occurring under the Haryana Urban
(Control of Rent and Eviction) Act, 1973 and hence, the Rent
Controller did not have jurisdiction to entertain the petition. The
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respondent Nos.1 to 3 also denied the relationship of landlord and
tenant between the parties. It was considered by respondent Nos.1 to
3 that the Lady Tandon Club described as respondent No.4 had been
occupying the portion of the property since 1936 as a licensee.
According to the respondents, after the gift of the property by
Bhagwan Dass, he had also the consent of the land owner for the gift
so made by him and had divested himself of all rights. The revenue
entry had also been mutated and mutation Nos.351 and 354 effected a
complete transfer of ownership in the Louis Club. As regards the
lease deed, it was contended that it was a proper transaction executed
on an apprehension that the gift deed was not valid. It was their
contention that all rights in respect of the property had become vested
in the State Government. It was averred that the complicated
questions of facts and law arose and the jurisdiction of the Rent
Controller, who had entertained the petition itself was disputed. It
was prayed in the alternative that the petitioners should be directed to
get the decision from the Civil Court and the petitions before him
should be summarily rejected. There were other technical objections
regarding the representation of the respondent Nos.1 to 3. Respondent
Nos.4 and 5 have also submitted their objections denying the
jurisdiction of the Rent Controller and setting aside generally facts
affirming the contentions raised by respondent Nos.1 to 3. The 6th
respondent had also filed his objections stating that the petitioners
were legally estopped from claiming ownership of the property where
several persons have donated the property for public use and when the
property had been used for the public benefit, the petitioners were not
Civil Revision No.2531 of 1994 (O&M) -6-
entitled to treat themselves as owners of the property and seek for
ejectment.
VI. Issue of jurisdiction-the core issue:
6. The Rent Controller and the Appellate Authority have
upheld the claim of the landlord and before this Court, the point which
was raised at the threshold is the nature of lease and the jurisdiction of
the Rent Controller to entertain the petition. Although, I had allowed
the respective counsel on both sides to argue on all points including
the merits of the case and the respective claims of the parties about the
existence or otherwise of the lease and the effect of subsequent
legislation conferred rights of ownership to occupancy tenants and the
effect of transfer of an occupancy tenancy, I deem it necessary to take
up the issue of the jurisdiction of the Rent Controller immediately for
the finding one way or the other would lead to the question whether
the consideration of all other contentions of parties is necessary or not.
VII. The recitals in the lease deed:
7. The translated copy of the lease deed sets out the
circumstances under which it was made “…..that the executant with his
own free will without any pressure gave possession for entertainment
vide gift dated 16.01.1909 in favour of Louis Club, Ambala City and
possession was also given to the club. The gift deed was also got
registered. As gift deed as per condition on line No.12, 13 of gift
deed is not legally valid (sic), so said gift deed was cancelled by the
present deed. Occupancy rights are given to Louis Club for its use.
Club is in possession. Club is authorized to use the land for the
purpose of club. For the occupancy rights of the executant the rent
Civil Revision No.2531 of 1994 (O&M) -7-
has been fixed at Rs.10 per year which will be paid yearly…… The
condition is that if club ceases to exist and land is not used then the
land will come back to the executant. If there is any construction the
executant will pay the market price. If the executant is not prepared to
pay the price the club is authorized to remove the materials and sell
the same to somebody else for which the executant will have no
objection. The owners have given consents separately for the above.
That perpetual lease deed has been scribed on 03.03.1909.” Even in
the gift deed dated 16.01.1909, the reference is to the fact that the
executant as well as his heirs have no interest left in their hands and
the 1st respondent has a right to use the land for the purpose of club. It
similarly contained reference to reversion to the owner if the property
is not put to use of the club.
VIII. Nature of activities of club not stipulated but landlord
has consented to the mode of user:
8. It can be seen that the activities of the club itself is not
anywhere stated specifically from the recitals of the lease but going by
the conduct of the successor-in-interest of the original executant
namely Gauri Shankar, it is clear that the original donee/permanent
lessee had not put the property to any use which was against what was
contemplated by the parties. Bhagwan Dass himself had written a
letter on 24.10.1938 (Ex.P-4) affirming receipt of rent and land
revenue from the club. In the year 1938, the President of the Louis
Club recorded the fact that a pavilion was constructed on the land at a
cost of Rs.9,000/- and had given to the District Board on certain
conditions, which included inter alia, that the District Board, Ambala
could arrange annual school meets in the land but if they desired to
Civil Revision No.2531 of 1994 (O&M) -8-
use the land for any other purpose, first they should obtain the consent
from the occupancy tenant Lala Bhagwan Dass and his heirs and
secondly from the Managing Committee members of the club. This
marks perhaps the first entry of how from the hands of Louis Club, the
District Board, Ambala obtains some interest in the property.
Bhagwan Dass also appeared to have given consent of such
transaction by its own letter dated 24.10.1938 (Ex.P-4) where it is
stated that if there was any non-payment of rent in respect of the
ground Bhagwan Dass expressed that he be let known by the
Secretary of the Louis Club so that he could recover the amount from
the District Board.
IX. Meaning of "Rented Land", explained:
(i) Definition under the Act
9. Admittedly, the property that had been rented out, assuming
that it was the subsequent perpetual lease that prevailed over the
original deed of gift was in respect of the land and not of building.
The “rented land” is defined under the Haryana Urban (Control of
Rent and Eviction) Act, 1973 under Section 2F as follows:-
“Rented land” means any land let separately for the purpose
of being used principally for business or trade”.
10. There are three expressions which are important for
consideration of this definition: (i) it shall be in respect of land and
not of building; (ii) it is the principal use or, to use synonym, the
predominent use; and (iii) that such use shall be for business or trade.
(ii) Decisions of Hon’ble Supreme Court considered
11. Learned State Counsel appearing for the petitioners states
Civil Revision No.2531 of 1994 (O&M) -9-
that the expression business or trade invokes concept of an activity for
profit or some activity which is more than mere entertainment.
According to him, by the terms of the gift and the lease, the property
had been let out to the club for its activities. The club’s activities are
themselves not clearly spelt out but by the subsequent conduct to
which the lessor was aware of, it is a clear fact that the club’s
activities partook the nature of construction of a pavilion and user of
the property by the District Board and the Municiplaity. The learned
counsel for the petitioners refers to a decision in Haji Ismail Valid
Mohamad Vs. Sports Club in the name of Union Sports Club 1992
AIR (SC) 1855; 1992(1) SCC 315, 1992(1)RCR (Rent) 7, while
dealing with the provisions of the Bombay Rents, Hotel and Lodging
House Rates Control Act, 1947 where the premises under tenancy
with a club engaged in promoting activities of indoor and outdoor
games was considered. Section 6 of the Act provided its applicability
to “premises let for residence, education, business, trade or storage
and also open land let for building purposes”. The Hon’ble Supreme
Court had adverted to the finding rendered by the Courts below that
the activities of the club related to playing of indoor games like cards.
In the opinion of the Hon’ble Supreme Court, the activities of the club
were no more in the nature of cultural activities or recreational
activities. The basic purpose of the club activities related to
fraternising among the members by playing indoor or outdoor games
and such activities could not lead to the conclusion that the premises
were let for purposes of education and the suit filed was found to be
competent. The case arose in a situation, where the club resisted the
Civil Revision No.2531 of 1994 (O&M) -10-
suit by saying that only the Rent Control Act could apply and the Civil
Court did not have jurisdiction to entertain the suit. The Hon’ble
Supreme Court found that if the activities of the club could not be
treated as one for education but only for recreation, the Act itself
would not be applicable and the tenant would not be entitled to the
benefits of the Act.
(iii) Decisions of Punjab & Haryana and other High
Courts considered
12. In Hazara Singh and others Vs. Dalip Singh and others
1981 AIR (Punjab) 155, 1981 (1) R.C.R. (Rent) 301, the issue was as
regards the applicability of the Act in two cases where the land was
used principally for business. According to this decision, if the land
was not principally let for business or trade, the Act itself could not be
applicable and the jurisdiction of the Rent Controller or the Appellate
Authority to entertain the ejectment application in respect of such
property would be barred. The decision of the Gujarat High Court
held in Rajnagar Club, Porimal Society Vs. Parimal Co-operative
Housing Society Ltd. 1994(1) RCR (Rent) 22 that if activities of a
club to which a property is let out is only for playing cards and
celebration of certain festivals, catering certain food-stuffs to its
members, it could hardly be said to be an activity of business. It was
again a case where a suit had been instituted against a club when a
club was trying to contend for a position that its activities part took
the nature of business and relying on the decision of Hon’ble Supreme
Court in Haji Ismail Valid Mohamad’s case (supra) held that the
activities of a club could not partake the character of business and
hence it was only the Civil Court which was competent to entertain
Civil Revision No.2531 of 1994 (O&M) -11-
the suit.
(iv) Scope of Full Bench ruling on expression
business
13. Learned counsel appearing for the landlord relies on the
decision of a Full Bench of this Court in The Model Town Welfare
Council Ludhiana Vs. Bhupinder Pal Singh 1971 (LXXIII) PLR
734 which according to him squarely governs the issue. The
reference of the Division Bench for constitution of a Full Bench was
in relation to a lease of land to a society free of cost for construction
of a library building thereupon at its own cost. One of the aims of the
society itself was to recognize libraries. The Division Bench made
the reference of a question whether the requirement of “rented land”
by the society for construction of a library building was covered under
Section 13 (3) (a) (ii) of the East Punjab Urban Rent Restriction Act.
It could be seen in this case that the land had been transferred by the
Government to a society subject to certain conditions by the
Government that the property would be used in a particular manner.
The construction had not been taken in hand immediately due to lack
of funds and a vacant part of the plot was let out to a private
individual for running a fuel and coal stall with a condition that the
property would be returned to the society when it was required by it.
That portion of the vacant land, which was given to the private tenant
was sought to be vacated by the society for its own personal
requirement for establishing a library. It should again be noticed from
the judgment that the vacant land which had been rented out to the
tenant was itself conceded by both parties as coming within the
definition of “rented land”. After all the private tenant had his own
Civil Revision No.2531 of 1994 (O&M) -12-
business and the question that was considered by the Division Bench
and which was referred to a Full Bench was never on an issue whether
the land in question was “rented land” or not. The point of reference,
however, was that since the society was seeking for ejectment of the
“rented land” for its business for running a liberty, was such a
requirement bona fide? The consideration whether library activity
was business was taken up to test the issue of bona fides and the
nature of land that had been rented out itself was not in question.
While answering the reference, the Full Bench had ruled that the
expression business was not a word of art and it should be taken in the
wider sense and not in the narrow sense. As per the ruling, the word
“business” was not necessarily to be understood as an expression of
commercial business carried on with profit motive. The word would
include within its scope a charitable business or a dealing in the
interest of public or a section of the public. The scope of the word
business in the provisions of the Act was not controlled or coloured by
the word “trade” occurring along with it in Section 2(f) of the Act.
Whereas every trade would be business, the reverse of it would not be
true. Business is a genus of which commercial and non-commercial
business and trade are some of the species.
(v) Full Bench reference did not examine any
dispute regarding “rented land”
14. The reference to the decision of the Full Bench of this Court
will have no relevance to this case except to understand the concept of
the term “business” itself which need not be confined only to
commercial activity that it could be even a charitable activity. Other
than this, the Full Bench was not deciding the issue of a contest on
Civil Revision No.2531 of 1994 (O&M) -13-
whether a property in dispute came within the definition of “rented
land” or not. As pointed out already both parties had conceded the
jurisdiction of the Court and had also conceded that the property was a
“rented land”. The definition of the business was again considered in
the context of examining the bonafides of the landlord for its own
business use of starting a library. In this case, however, the issue is
whether the property rented out came within the definition of “rented
land”. The crucial issue is whether the activity of a club which was by
its conduct seen as erection of pavilions and stalls for public use for
sports activity and recreation and by the Municipality for similar
purposes could be said to be for business or trade.
(vi) Club activities shall not mean business
15. The activities of the respondents for recreation or public use
by sinking tubewell could hardly answer the definition of either trade
or business. While trade would normally involve some activity for
profit, business itself may not be necessarily for profit. It could even
be charitable as pointed out by the Full Bench of this Hon’ble Court
but a pure recreational activity of a club as observed by the Hon’ble
Supreme Court in Haji Ismail Valid Mohamad’s case (supra) and
found by the decisions of the Assam and Gujarat High Courts referred
to (supra) could never be said to be a business activity.
16. Halsbury, 4th Edn. (Vol.27, para 325, p.273) defines
business as follows:-
“The word “business” extends the convenant to all cases
where work, involving the recourse of numerous persons to
the premises, is done for payment, or even without payment
Civil Revision No.2531 of 1994 (O&M) -14-where the result is in effect the same as if a charge were
made. The making of profit is not essential to constitute a
business; nor, on the other hand, does payment necessarily
constitute one.”
17. The Hon’ble Apex Court explained the expression
“business” as follows:-
“Business connotes some real, substantial and systematic or
organised course of activity or conduct with a set purpose.”
Narain Swadeshi Mills Vs. Commissioner of Excess
Profits Tax, AIR 1955 SC 176.
The ‘business’ referred to is commercial business.
The Government is engaged in huge commercial projects
and so far as such activities are concerned (e.g. transport by
land, air or sea) it cannot be said that the Government is not
carrying on business. In its commercial ventures the
Government is entering into contracts with citizens. These
contracts are governed by the ordinary law of the land.
The word ‘business’ is of large signification, and
in its broadest sense includes nearly all the affairs in which
either an individual or a corporation can be actors.
The word ‘business’ has been held to denote an
activity with the object of earning profit. The business of a
tea-grower and manufacturer is not merely to grow tea-
plants but to collect tea-leaves and render them fit for sale.
The tending of tea-garden to preserve the plants cannot be
described as a continuation of the business. Senairam
Civil Revision No.2531 of 1994 (O&M) -15-Doongarmall Vs. Commissioner of Income Tax, AIR 1961
SC 1579, 1581.
“A single transaction does not constitute business.
The concept of business postulates continuity of
transactions.” Manipur Administration Vs. Nila Chandra
Singh, AIR 1964 SC 153.
Business includes:-
(a) day to day running of the business,
(b) rationalization of business administration and
modernization of machinery of business,
(c) preservation of business and protection of its
assets and property from expropriation,
coercive process or assertion of hostile title,
(d) payment of statutory dues and taxes imposed
as pre-condition for commencement or
carriage of business,
(e) things incidental to carriage of business.
Birla Cotton Spng. & Wvg. Mills Ltd. Vs.
CIT, (1967) 64 ITR 568, 584 (Cal), affirmed
(1971) 82 ITR 166 (SC).”
18. Black’s Law Dictionary (seventh edition) defines business as
follows:-
“A commercial enterprise carried on for profit; a particular
occupation or employment habitually engaged in for
livelihood or gain.”
19. In none of these definitions, it is possible to note a pure
Civil Revision No.2531 of 1994 (O&M) -16-
recreational activity as falling within the concept of either business or
trade. In my view, the gift made by the original owner in favour of the
first respondent for establishing a club and the permanent lease
granted for the same purpose admit of no ambiguity that no activity of
business or trade was undertaken by any of the respondents. The
subsequent conduct of the respondents in establishing pavilions
putting it to recreational activity by establishing rifle clubs or sinking
tubewell by the Municipality for public consumption did not detract
from the original grant that excluded any activity which was in the
nature of business or trade. The act of munificence by the original
owner by first making a gift and when he found that the gift itself
might not be valid in the eye of law, of creation of permanent lease
showed that the landlord wanted to benefit the lessee, a State
functionary under the belief that the property would be put to only
public use for the welfare of the general public and did not seek to
retain to himself the right to claim possession except on the happening
of certain contingencies namely of cessation of activities of the club.
The property which was the subject matter of the gift and later by the
lease do not, in my view, part take the character of the “rented land”
coming within the definition of the Haryana Urban (Control of Rent
and Eviction) Act, 1973 and the petition filed for eviction invoking
the said provisions is not maintainable. The decisions of the Rent
Controller and the Appellate Authority holding otherwise are set
aside.
X. Rent Controller has no jurisdiction:
20. Having regard to the fact, I find that the Rent Controller
Civil Revision No.2531 of 1994 (O&M) -17-
himself did not have jurisdiction to entertain the petition it becomes
unnecessary for me to examine whether by operation of law, the
property had become the absolute property of Government and the
landlord hismelf lost all rights of the property by any change of law
relating to the effect of transfer by an occupancy tenant and the
vesting of the property in the State. The petitioners shall have
appropriate remedy before a Civil Court, if so advised, but the issue
whether the petitioners are the owners of the property or whether the
ownership is divested in favour of the State shall all be matters that
would be decided only in a property constituted civil suit and not in
the proceedings before the Rent Controller.
XI. Conclusion:-
21. Under the circumstances, all findings rendered by the Rent
Controller and the Appellate Authority on every other issue stand
vacated by virtue of the fact that neither of them had the jurisdiction to
enter upon such issues in a rent control petition.
22. The civil revisions are, therefore, allowed and the order of
ejectment passed is set aside. There shall be, however, no order as to
costs.
(K. KANNAN)
JUDGE
March 04 , 2009
Pankaj*