PETITIONER:
DWARKA PRASAD
Vs.
RESPONDENT:
DWARKA DAS SARAF
DATE OF JUDGMENT11/08/1975
BENCH:
KRISHNAIYER, V.R.
BENCH:
KRISHNAIYER, V.R.
RAY, A.N. (CJ)
MATHEW, KUTTYIL KURIEN
FAZALALI, SYED MURTAZA
CITATION:
1975 AIR 1758 1976 SCR (1) 277
1976 SCC (1) 128
CITATOR INFO :
D 1981 SC 537 (13)
R 1985 SC 582 (40)
D 1989 SC 93 (4,10)
ACT:
U.P.(Temporary) Control of Rent and Eviction Act, 1947
s. s(a) -Scope of - Test to determine what is accommodation
where the lease is composite.
Interpretation-Proviso-How could be read
HEADNOTE:
The term "accommodation" is defined by s. 2(a)- Scope
of the U.P. (Temporary) Control of Rent and Eviction Act,
1947 to mean residential and non-residential accommodation
in any building or part of a building and includes among
others any furniture supplied by the landlord for use in
such building or part of a building and any fittings affixed
to such building or part of a building for the more
beneficial enjoyment thereof. A proviso was added to clause
(a) by the Amending Act XVII of 1954 which says "but does
not include any accommodation used as a factory or for an
industrial purpose where the business carried on in or upon
a building is also leased out to the lessee by the same
transaction."
The respondent took on lease the cinema theatre of
which the appellant was the owner. The lease deed provided a
rent of Rs. 400 p.m. for the building simpliciter and Rs.
1000 for the projector fittings, fans and other fixtures.
The suit for eviction filed by the appellant was dismissed
by the trial court holding that the suit properly was not
accommodation within the meaning of the Act. The High Court
upheld the view of the trial court.
On appeal to this Court it was contended that the
dominant purpose or real subject of the lease was the cinema
apparatus and fittings, including subsidiarily and
incidentally the building.
Allowing the appeal,
^
HELD: The lease sued on does not fall within the scope
of accommodation The appellant is entitled to a decree of
eviction. [290B]
(1) (a) The lease of an accommodation must essentially
be of a building- not a business or industry together with
the building in which it is situated.[82B-C]
(b) Where the lease is composite and has a plurality of
purposes, the decisive test is the dominant purpose of the
demise. The additions such as gardens grounds and out-
houses, if any, appurtenant to such building, any furniture
supplied by the by the landlord for the use in such
building, electrical fittings, sanitary fittings, and so on
are subservient and beneficial to the building itself. They
make occupation of the building more convenient and pleasant
`when the principal thing demised is the building and the
additions are auxiliary. The furniture and fittings
visualised in the concept of building are calculated to
improve the beneficial enjoyment of the premises leased.
[282D-E]
(c) The legislative policy is to control rents and
evictions of buildings, rack-renting and profiteering by
indiscriminate eviction from buildings, residential and non-
residential. The law sought to rescue exploited tenants of
building. It is, therefore, fair to hold that the protected
category of accommodation was residential and non-
residential buildings and not business houses. [283A-B]
(d) It would be a travesty of language to speak of a
lease of a building when what is substantially made over is
a business or industrial plant. If a business were the
subject matter of the lease, the prominent thing win be not
what houses the business but the business itself. The
building becomes secondary since clearly
278
business or industry has to be accommodated in some
enclosure or building. In all such cases the lessor makes
over possession of the building as part and parcel of the
transfer of possession of the business. [283E-F]
In the instant case a conspectus of factors settles the
issue in favour of the landlord that the real intention of
the parties to the lease was to demise primarily the cinema
equipment and secondarily the building, the lease itself
being a composite one. [284B-C]
(2) If on a fair construction, the principal provision
is clear, a proviso cannot expand or limit it. Sometimes a
proviso is engrafted by an apprehensive draftsman to remove
possible doubts, to make matters plain, to light up
ambiguous edges. A proviso ordinarily is but a proviso
although the golden rule is to read the whole sections
inclusive of the proviso, in such manner that they mutually
throw light on each other and result in a harmonious
construction. The Amending Act in this case clarified what
was implicit earlier and expressly carved out what otherwise
month be mistakenly covered by the main definition. The
proviso does not expand by implication, the protected area
of building tenancies to embrace business leases.[284F-G]
JUDGMENT:
CIVIL APPELLATE JURISDICTION Civil Appeal No. 210 of
1973.
From the Judgment and Decree dated 13th March, 1972 of
the Allahabad High Court in First Appeal No. 448 of 1968.
R. K. Garg, S. C. Agarwalla V. J. Francis and Madho
Prasad, for the appellant.
V. M. Tarkunde, Hardayal Hardy and P. P. Juneja, for
respondent No. 1.
The Judgment of the Cort was delivered by
KRISHNA IYER, J.-The rent control law has been a rich
source of lengthy litigation in the country and the present
appeal, by certificate under Art. 133(1)(a) of the
constitution, at the instance of the appellant landlord is
inustrative of one reason for such proliferation of cases,
namely, the lack of clarity in legislative drafting and
dovetailing of amendments which have the potential for
creating interpretative confusion.
The facts are few and may be stated briefly, although,
at a later stage, further details may have to be mentioned
at relevant places to inumine the arguments advanced on both
sides by counsel, Shri R. K. Garg (for the appellant) and
Shri V. M. Tarkunde (for the respondent). Shortly put, the
legal issues are only three: (A) Is a cinema theatre,
equipped with projectors and other fittings and ready to be
launched as an entertainment house, an ‘accommodation’ as
defined in. s. 2(1) (d) of the U.P. (Temporary) Control of
Rent and Eviction Act, 1947 (U.P. Act III of 1947) (for
short, the Act)? (B) If it is an ‘accommodation as so
defined, what is the impact of the proviso brought in by
amendment in 1954 (Act XVII of 1954) (for short, the
Amending Act)? (C) If the Act barricades eviction by the
landlord because the permises let constitutes an
‘accommodation’, does the repeal of the Act and exclusion of
cinema houses altogether from the operation o the 1972 Act
(U.P.. Act 13 of 1972) (for short, the later Act) rescue the
right of the appellant-landlord to eject the tenant
respondent?
279
The building covered by the suit is admittedly one
built and adapted for screening films. The plaintiff had
been carrying on cinema business in this theatre for a long
number of years but, when he discontinued, the defendant
approached him in January 1952 for the grant of a lease of
the building with all the equipment and fittings and
furniture necessary for his operating the cinema. The
necessary certificates, sanctions and permissions,
preliminary to the conduct of cinema shows, stood in the
name of the plaintiff, including water-pipe connection,
electricity supply and structural fitness. Before
commencement of cinema shows, a licence is necessary under
the U.P Cinemas (Regulation) Act and this licence has to be
taken out by the actual operator of the cinema and not by
the landlord of the theatre and equipments. Therefore, once
the lease for the entire building and cinema projector,
accessories and the like was finalised, the deed of demise
was actually executed, it being provided that the
commencement of the lease would synchronize with the
inaugural cinema show on March 25, 1953. It was provided in
the lease deeds that the rent for the building, simpliciter,
may be shown separated from that attributable to the costly
equipments, for the purposes of property tax and other
taxes. By this apportionment, the building, as such was to
bear a burden of Rs. 400/- per mensem by way of rent and a
monthly sum of Rs. 1,000/- was fixed for the projector and
all other items fixed in the building. The leases were
renewed from time to time tin 1959. The suit for eviction
was based on these leases which formed the foundation of the
action.
At this stage it may be noticed that the learned
counsel for the defendant-tenant ‘did not dispute that
running a cinema business did constitute an industrial
purpose so that the accommodation was used for an industrial
purpose’. Another significant fact admitted by the
detendant’s counsel before the High Court was that for the
purpose of this case, in spite of there being separate
documents of lease in respect of the demised properties as
referred to above, these sets of contracts may be treated as
a single transaction each time’. On these facts and
circumstances, we have to decide whether the subject matter
of the demise is an ‘accommodation’ within the meaning of
the Act. After settling this issue, the other two points
adverted to above may have to be considered. While the trial
Judge held that the suit property was not ‘an accommodation’
within the sweep of the Act. the High Court, on appeal
before a Division Bench, could not are and, on account of
the difference of opinion between the two Judges who heard
the appeal, the case was posted before a third Judge who
took the view that the subject matter of the case in
question was an ‘accommodation’ within the meaning of the
Act The suit, on this view, had to be dismissed. The
aggrieved landlord has come up to challenge this judgment.
Let us now take a close-up of the definition of
‘accommodation’ in the Act and apply it to the admitted
facts here. Section 2(a), as it stood at the time of the
first lease ran thus:
“Accommodation” means residential and non-
residential accommodation in any building or part of a
building and includes,
280
(i) gardens, grounds and out houses, if any
appurtenant to such building or part of a
building;
(ii) any furniture supplied by the landlord for
use in such building or part of a building;
(iii)any fitting affixed to such building or part
of a building for the more beneficial
enjoyment thereof.’
The Amending Act added a clause reading thus:
“but does not include any accommodation used as a
factory or for an industrial purpose where the business
carried on in or upon the building is also leased out
to the lessee by the same transaction.”
at the end of clause (a). We have to go by the amended
definition in the present case. Since the basic fabric of
the demise remained the same notwithstanding several
renewals its terms have a bearing on the decision of the
case. So we may reproduce it (relevant part) at this stage:
“We have taken a Cinema hall known at Dwarka
Prasad Theatre Hall … for running a cinema… On a
monthly rent of Rs. 200/- commencing from March
25.1953.”
To complete the picture, we quote from the factual
summing up by Satish Chandra J.. since it is convenient and
uncontested .
“The same day the defendants executed another case
deed stating that they had taken the Dwarka Theatre
Hall on a rent of Rs. 2000/- per month and that in this
building there is new furniture fitted for about 5000
seats with ceiling and fittings of electric light and
fans, complete machinery, ceiling fans and operating
machine together with all articles present in the hall
of the theatre a list whereof has been duly signed by
the executant and that they had taken this also on a
monthly rent of Rs. 1,100/- besides rent of the
building. The lease deed dated 1-4-1954 executed by the
defendants stated that whereas besides the cinema house
popularly known as Dwarka Theatre Hall which has been
taken on hire of Rs. 2000/- per month, the defendants
had also taken on rent of Rs. 800/- per month the new
furniture with tapestry about 500 seats and ceiling and
complete electric fittings including fans and machine
and ceiling fans and operating machine together with
the entire paraphernalia present in the theatre hall.
The defendants in this lease deed stated that they had
taken the building on rent to continue running a
cinema. The lease deed of 10th January 1956 was a
confirmation of the same subject matter of the lease.
It appears that by now the landlord was fitting
281
new furniture in the hall and for that reason the rent
was increased to Rs. 1200/- per month. Similarly, in
the lease deed dated 26th May, 1959 the defendants
stated that they have taken a cinema hall known as
Dwarka Theatre Hall on a monthly rent of Rs. 400/- and
the furniture of about 500; seats, ceiling, electric
fittings, with fans, complete machine, ceiling fans,
operating machine and other articles present ill the
theatre hall, a list whereof was attached, on a monthly
rent of Rs. 1000/-.”
Let us revert to the law. ‘Accommodation’, in plain
English may cover cinema houses with or without fittings.
But legislative. drafting does not always leave things that
easy. Had there been a definition of ‘controlled
accommodation’, he who runs and reads would have gathered
the intendment of the statute. Here is a further
complication introduced by the addition of a proviso of
sorts by the amending Act and a whole host of authorities on
the canons of constriction and functional role of a proviso
and its indirect impact on the main provision has been
brought to our notice. Does a proviso carve out something
from the whole? Does it serve an independent enacting
purpose? We do not think that legislative simplicity is all
abstruse art, provided we reform our drafting methodology.
The Renton Committee in England high-lighted the importance
of easy comprehensibility of law and wrote:
“There is hardly any part of our national life or
of our personal lives that is not affected by one
statute or another. The affairs of local authorities,
nationalised industries. public corporations, and
private commerce are regulated by Legislation. The life
of the ordinary citizen. is affected by various
provisions of the statute book from cradle to grave.”
The instant case which deals with a legislation
affecting the shelter. of common people brings up the same
problem.
The main definition of ‘accommodation’ in the Act
brings within its sweep not all kinds of buildings nor all
types of realty leases. The protected category is confined
to those species of leases whose purpose and subject matter
answer the statutory prescriptions. More explicitly the
wider connotation or dictionary meaning of ‘accommodation’
must yield to the definitional delimitation. The core of the
controversy here is (a) whether the lease is of the
building, the fittings and other fixtures merely making for
the beneficial enjoyment of and ancillary to the building,
as urged by the tenant or whether the building provides a
bare, though appropriately designed, enclosure to house an
enterprise, dominant purpose or real subject of the lease
being the cinema, apparatus and fittings, including
subsidiarily and incidentally, though necessarily. the
structure of brick and mortar. and (b) whether the cinema,
to fall within the exclusionary clause added by the Amending
Act, must be actually a going concern with all the licenses
for showing films and running the theatre being in the name
of the lessor. Lastely, the effect of the repeal of the Act
and the opening provision of the later Act putting cinemas
out of its application, has been debated at the bar.
282
The Central Act (The Cinematograph Act) and the State
Act The U.P. Cinema Regulation Act) govern the exhibition
of films and it is not in dispute that the theatre had been
built for and used as a cinema house even before the first
lease to the respondent in 1953. The further agreed facts
are that when the last renewed lease of 1953 with which we
are directly concerned was executed, there was a running
cinema business and further that the rent apportioned for
the building qua building was only a fraction of the rent
‘for the costly fixtures intended for the cinema business’.
Looking at the three problems posed, unaided by the
many decisions cited by counsel, we are inclined to the view
that a lease Of an ‘accommodation’ must essentially be of a
building not a business or industry together with the
building in which it is situated. of course, a building
which is ordinarily let, be it for residential or non
residential purposes, will not be the bare walls, floor and
roof, but will have necessary amenities to make habitation
happy. That is why the legislature has fairly included
gradens, grounds and out houses, if any, appurtenant to such
building. Likewise, leases some times are of furnished
buildings and that is why ‘any furniture supplied by the
landlord for use in such building’ is treated as part of the
building. In the same strain, we may notice, as a matter of
common occurrence, many fittings ‘such as electrical
fittings, sanitary fittings, curtains and venetian blinds
and air-conditioning equipment being fixed to the building
by the landlord so that the tenant’s enjoyment of the
tenement may be more attractive. The crucial point is that
these additions are appurtenant, subservient and beneficial
to the building itself. They make occupation of the building
more convenient and pleasant but the principal thing demised
is the building and the additives are auxiliary. ‘Where the
lease is composite and has a plurality of purposes, the
decisive test is the dominant purpose of the demise.
Forgetting for a moment the clause introduced by the
amending Act, it is plain that the furniture and fittings
visualized in the concept of ‘accommodation’ are calculate
to improve the beneficial enjoyment of the premises leased.
Counsel for the tenant has countered this interpretation by
an ingenious and plausible submission. He emphasis that the
present building was conceived, designed and structured
expressly as a cinema house conforming to the regulations in
this behalf and the purpose of the owner was to use the
auditorium and annexes purely as a cinema house. According
to him, when a cinema theatre is erected, it becomes useless
unless the necessary equipment for exhibiting films are also
fitted up. In this view, the relative cost of the fixtures
is immaterial and all these items, however costly, are
calculated to fulfil the very object of the construction of
the cinema theatre. In short, the fittings and furniture and
like items are beneficial to and enhance the worth of the
building and cannot be divorced or dissected from the whole
object which animated the project of the building
construction qua a cinema house. So presented, there is a
certain attractiveness in the argument, although this fact
of interpretation does not find a place in the submission on
behalf of the respondent in the High Court.
283
What then is the flaw in this submission, or merit in
the earlier one ? The legislative policy, so far as we can
glean from the scheme of the Act, is to control rents and
evictions of buildings, rack-renting and profiteering by
indiscriminate eviction from buildings, residential and non-
residential, being the evil sought to be suppressed. The law
sought to rescue exploited tenants of buildings. If this be
a sound reading of the mind of the legislature it is fair to
hold that the protected category of accommodation was
residential and non-residential buildings and not business
houses.
We have been at pains to explain that the subject
matter of the leases covered by the definition of
‘accommodation’ is ‘any building or part of a building’. We
have carefully analyses the inclusive expressions in the
original definition such as appurtenant gardens grounds and
out-houses, furniture for use in the building and fittings
affixed to the building. In this statutory context, gardens,
out houses, furniture and fittings mean annexures for the
better enjoyment of the building. In this sense, the
dominant intention must be to lease the building qua
building. If that be the intention the rent control law
protects. On the other hand, if a going undertaking such as
a running or ready-to-launch and fully equipped cinema house
is covered by the provision, the emphasis is not so much on
the building but of the business, actual or imminent. There
is nothing in the present definition which helps this shift
in accent.
We may reinforce our view from the expressions used,
because all the three categories included as additions play
a subservent role, while if a business were the subject
matter of the lease, the prominent thing will be not what
houses the business but the business itself. The building
becomes secondary since every business or industry has to be
accommodated in some enclosure or building. In all such
cases. the lessor makes over possession of the building as
part and parcel of the transfer of possession of the
business. It would be a travesty of language to speak of a
lease of a building when what is substantially
made over is a business or industrial plant.
How then do we distinguish between a lease of a
business or industry housed in a building from a building
which has fixtures for more beneficial enjoyment? The former
is a protected ‘accommodation’ while the latter is left for
free market operation. In the present case we have to
visualize what was the dominant or decisive component of the
transaction between the parties, the tenancy of the building
qua building or the taking over of a cinema house as a
business, the projectors, furniture, fittings and annexes
being the moving factor, the building itself playing a
secondary, though necessary, role in the calculations of the
parties. Going by the rental apportioned, it is obvious
that the parties stressed the cinema equipment as by far the
more important. Judging by the fact that there had already
been a cinema in this house for several years, with the
necessary certificates under the various statutes for
running a cinema theatre obtained by the landlord and that
the lease itself was to commence only from the . date of the
first show of the films, doubts regarding the essential
284
Object and subject of the bargain said dispelled. The mere
circumstance that the licence for showing films was taken by
the tenant is of little consequence as the law itself
requires it to be in his name. The further circumstance that
the term of the lease in one case may vary from the other
also where, as here, two deeds are executed, is not a
telling factor, in view of the clear admission by counsel
for the respondent that the two lease deeds together
constituted a single transaction and that the lease was l`or
an industrial purpose, to wit running a cinema business. The
conspectus of factors no one circumstance taken by itself
thus settles the issue in favour of the land-lord who
contends that what has been granted is a lease of a cinema
business and, at any r ate, the real intent of the parties
to the lease was to demise primarily the cinema equipment
and secondarily. the building, the lease itself being a
composite one.
Social justice, legislative policy, legal phraseology
and presidential wisdom converge to the same point that the
scheme of control . includes, as its beneficiary, premises
simpliciter and excludes from its ambit businesses
accommodated in buildings. To hold otherwise is to pervert
the purpose and distort the language of s.2(a).
The amending clause, argues Shri Tarkunde” strikes a
contrary note. For, if the main definition in itself fences
off leases of business and industry, why this superfluous
proviso expressly excluding accommodation ‘used as a factory
or for an industrial purpose where the business is carried
on in or upon the building is also leased out to a lessee by
the same transaction’? The whole section must be read
harmoniously, each part throwing light on the other and
redundancy being frowned upon. A proviso carves out of a
larger concept and the argument is that the need for the
exclusionary clause itself shows that otherwise factories
and businesses are within the operational area of the main
definition.
There is same validity in this submission but if, on a
fair constriction. the principal provision is clear, a
proviso cannot expand or limit it. Sometimes a proviso is
engrafted by an apprehensive draftsman to remove possible
doubts, to make matters plain, to light up ambiguous edges.
Here, such is the case. In a country where factories and
industries may still be in the developmental stage, It is
not unusual to come across several such units which may not
have costly machinery `or plant or fittings and
superficially consist of bare buildings plus minor fixtures.
For example, a beedi factory or handicraft or carpentry unit
a few tools, some small contrivances or connection of
materials housed in a building, will superficially look like
a mere ‘accommodation’ but actually be a humming factory or
business with a goodwill as business, with a prosperous
reputation and a name among the business community and
customers. Its value is qua business, although it has a
habitation or building to accommodate it. The personality of
the thing let out is a going concern or enterprise, not a:
lifeless edifice. The legislature, quite conceivably,
thought that a marginal, yet substantial, class of buildings
with minimal equipments may still be good businesses and did
not require protection as in the case of ordinary building
tenancies. So, to dispel confusion from this region and to
285
exclude what seemingly might be leases only of buildings but
in truth might be leases of business, the legislature
introduced the exclusionary proviso.
While rulings and text books bearing on statutory
construction have assigned many functions for provisos, we
have to be selective, having regard to the text and context
of a statute. Nothing is gained by extensive references to
luminous classics or supportive case law. Having explained
the approach we make to the specific ‘proviso’ situation in
s. 2(a) of the Act, what strikes us as meaningful here is
that the legislature by the amending Act classified what was
implicit earlier and expressly carved out what otherwise
might be mistakenly covered by the main definition. The
proviso does not. in this case, expand, by implication, the
protected area of building tenancies to embrace ‘business’
leases.
We may mention fairness to counsel that the following,
among other decisions, were cited at the bar bearing on the
uses of provisos in statutes: Commissioner of Income-tax v.
Indo-Mercantile Bank Ltd.(1); M/s. Ram Narain Sons Ltd. v.
Asst. Commissioner of Sales Tax(2); Thompson v. Dibdin (8);
Rex v. Dibdin (4) and Tahsildar Singh v. State of U.P.(5).
The law is trite. A proviso must be limited to the subject
matter of the enacting clause. It is a settled rule of
construction that a proviso must prima facie be read and
considered in relation to the principal matter to which it
is a proviso. It is not a separate or independent enactment.
‘Words are dependent on the principal enacting words, to
which they are tacked as a proviso. They cannot be read as
divorced from their context’ (1912 A.C. 544). If the rule of
construction is that prima facie a proviso should be limited
in its operation to the subject matter of the enacting
clause, the stand we have taken is sound. To expand the`
enacting clause, inflated by the proviso, sins against the
fundamental rule of construction that a proviso must be
considered in relation to the principal matter to which it
stands as a proviso. A proviso ordinarily is but a proviso,
although the golden rule is to read the whole section,
inclusive of the proviso, in such manner that they mutually
throw light on each other and result in a harmonious
construction.
“The proper course is to apply the broad general
rule of construction which is that a section or
enactment must be construed as a whole each portion
throwing light if need be on the rest.
The true principle undoubtedly is, that the sound
interpretation and meaning of the statute, on a view of
the enacting clause, saving clause, and proviso, taken
and construed together is to prevail.”
(Maxwell on Interpretation of Statutes 10th Edn. P. 162)
286
We now move on to `dominant intent’ as the governing
rule. In our view, the dominant intent is found in leading
decision of this Court. Indeed, some State Legislatures,
accepting the position that where the dominant intention of
the lease is the enjoyment of a cinema, as distinguished
from the building, have deliberately amended the definition
by suitable changes (e.g. Kerala and Andhra Pradesh) while
other Legislatures, on the opposite policy decision, have
expressly excluded he rent control enactment (e.g., the
latter Act).
In Uttam Chand v. S. M. Lalwani(1) this Court had to
consider analogous position under the Madhya Pradesh
Accommodation Control Act where also the term
‘accommodation’ was defined substantially in the same
language. The Court was considering the grant of the lease
of a Dal Mill vis a vis ‘accommodation’, as defined in Act
. Gajendragadkar, CJ., elucidated the legal concept which
reinforces our stand, if we may say so with respect. The
learned Chief Justice. Observed:
‘What then was the dominant intention of the
parties which they entered into the present
transaction)? We have already set out the material
terms of the lease and it seems to us plain that the
dominant intenion of he appellant in accepting the
lease from the respondent was to use the 1) building as
a Dal Mill. It is true that the document purports to be
a lease in respect of the Dal Mill building, but the
said description is not decisive of the matter because
even if the intention of the parties was to let out the
Mill to the appellant, the building would still have to
be described as the Dal Mill building. It is not a case
where the subject matter of the lease is the building
and along with the leased building incidentally passes
the fixture of the machinery in regard to the Mill, in
truth, it is the Mill which is the subject matter of
the lease, and it was because the Mill was intended to
be let out that the building had inevitably to be let
out along with the Mill. The fact that the appellant
contends that the machinery which was transferred to
him under the lease was found to be not very
serviceable and that he had to bring in his own
machinery, would not after the character of the
transferred. This is not a lease under which the
appellant entered into possession for the purpose of
residing the building at all; this is a case where the
appellant entered into the lease for the purpose of
running the Dal Mill which was located in the building.
It is obvious that a Mill of this kind will have to be
located in some building or another, and so, the mere
fact that the lease purports to be in respect of the
building will not make it a base in respect of all
accommodation as defined by s. 3(a)(y)(3). he fixtures
described in the schedule to the lease arc in no sense
intended for the more beneficial enjoyment of the
building. The fixtures are the primary object which the
lease was intended to cover. and the building in which
the fixtures are located comes in incidentally. That
287
is why we think the High Court was right in coming to
the conclusion that the rent which the appellant had
agreed to pay to the respondent under the document in
question cannot he said to be rent payable for any
Accommodation to which the Act applies.”
The ratio of that case is that the Court must apply the test
of dominant intention of the parties to determine the
character of the lease i.e., what was the primary purpose of
the parties in executing the ‘document ? the mere fact that
the demise deals with a building does not bring it within
the ambit of accommodation. In the case before us the
fixtures are not for the more beneficial enjoyment of the
building. On he contrary, the possession of the building is
made over as an integral part of, and incidental to? the
making over of the cinema apparatus and costly appliances.
In the language of the learned Chief Justice in Uttam Chand
case (supra), the ‘fixtures are the primary object which the
lease was intended to cover and the building in which the
fixtures are located comes in incidentally’.
The following decisions were relied on, or referred to,
by counsel for the appellant: Raje Chettty v.
Jagannathadas(1); Molld. jaffer Ali v. S. R. Rao(2);
Govindan v.Kunhilekshmi Amma(3)
Rajamannar, C.J., speaking for the Division Bench in
Raja Chetty’s case (supra) dealt with the case of a lease of
a cinema theatre in Madras in relation to the rent control
law as it obtained in that State then. In that connection,
the learned Chief Justice observed:
“We have come to the conclusion that the Lessors’
application in this case is not maintainable on other
grounds as well. In our opinion the lease in question
is not governed by the provisions of Madras Act XV of
1946. That Act regulates only the letting of
residential and non-residential buildings. In s. 2,
building has been defend as to include the garden,
grounds and out-houses appurtenant to the building and
furniture supplied by the landlord for use in such
building. In the case before us, there is no lease of a
mere building or a building with compound and
furniture of the. sort covered by the definition. The
Lease is of land and building together with fixtures
fittings, cinematographic talkie equipments, machinery
and other articles The lessors, evidently aware of the
composite nature of the demise, have prayed in their
petition for eviction of the Lessees from the land and
buildings only. On behalf of the respondent Mr. K. V.
Ramachandra lycr relied strongly on the provision in
the ‘deed which splits up the monthly rent and hire of
Rs. 3,200/- into Rs.1600/- being rent for the ground
and superstructure Rs. 800/- being hire of furniture
Rs.. 800/- being hire of talkie equipments and
machinery. fittings and lessors’ fixtures. We have no
hesitation in
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holding that this splitting is purely notional and
nominal and intended probably for purposes relating to
the municipal assessment and other extraneous
considerations. When we asked Mr. Ramachandra lyer what
would happen, in this case when there is an eviction of
the lessees from the land building, to the machinery
and equipments etc., and whether there was any
provision in the deed relating to them, he confessed
that there was no specific pro vision in the deed.
Obviously they cannot be governed by Madras Act XV of
1946 and so he said they must be governed by the
general law of contract. He also conceded that if the
lessees paid Rs. 1,600/- but defaulted in the payment
of the balance which is due as hire, the lessors have
no right to ask for eviction under the Rent Control
Act. We think that the attempted division of the lease
and separation of rights in regard to two classes of
property is in the highest degree artificial, never
contemplated by the parties. Here is a lease of a
talkie house with everything that is necessary to run
cinema shows. To split up such a compo site lease as
this into separate contracts of lease and hire is to
destroy it altogether. Mr. Ramachandra Iyer argued that
the furniture which was covered by the lease fell with
in the definition of s. 2 of the Act. We do not agree.
The observations of the learned Judges in App. No. 590
of 1945 (Patanjali Sastri and Bell JJ.) in dealing with
the plant, machinery and other moveables which were
demised along with a factory are very apposite in this
connection:
No doubt in one sense the buildings comprised in
the lease deed contain articles supplied by the
landlord; but we cannot agree that what was so supplied
can be considered in any modern sense as being
furniture.’
Though in that case the learned Judges were
dealing with the lease of factory called the West Coast
Match Co., which consisted of land and buildings
including a bungalow used for residential purposes
together with plant, machinery and moveables contained
therein, we think the principle of that decision would
apply equally to the case before us in which there is a
lease not merely of a building but of a cinema theatre
with all necessary equipment far the exhibition of
It is true that in Jaffer Ali’s Case and in Govindan’s
case (supra) (the Andhra and Kerala decisions referred to
above) cinema theatres have been held to fall within the
definition of building, under the relevant rent control law
of those States. A bare reading of the two cases would show
that certain amendments had been made to the parent statutes
whereby the definition was expanded and its wide range was
male to include all tenancies relating to all structures,
even though accessories, furniture and fittings for use in
the house were
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also made over. There is no doubt that the word fittings’
may take in a projector or other apparatus used for a cinema
but it is one thing to say that apparatus is filed in a
building and it is another to say that such fixture or
apparatus is for the beneficial enjoyment of the building.
Therefore it depends on the words used reflecting the
legislative policy of each state Legislature. Indeed in
Venkayya v. Venkata Subba Rao(1) a Division Bench of the
Andhra Pradesh High Court considered whether the lease of a
fixture comprising buildings and machinery came within the
sweep of the rent control law. The court held that the lease
of a running factory, comprising costly machinery intended
to be used for manufacture, did not fall within the
definition. The question, in each case, the learned Judges
pointed out, would be what is the dominant part of the
demise and what the main purpose for which the building was
let out is. In Amritlal N. Shah v. Annapurnamma(2) the same
court held that the lease of cinema did not come within the
purview of Madras Act 25 of 1949. Definitional ramifications
need not detain us nor decisions turning on them.
Shri Tarkunde pressed upon us the decision in Karsandas
v. Karanji(3) and Karnani Properties Ltd. v. Miss
Augustine(4). One of them did refer to a cinema theatre with
fittings and generators. Certain Calcutta decisions,.Kali
Prosad v. Jagadish Pada(6) and D. S. Jain v. Meghamale
Roy(6) were. also cited before us. all these cases, the
decisions turned on the precise language used. We do not see
any need to discuss these and the other decisions cited
before us because we have explained why the conclusion we
have reached is in consonance with the sense, purpose and
language of the Act. For the same reason we content
ourselves with merely mentioning that in Harisingh v.
Ratanlal(7) a Division Bench of the Madhya Pradesh High
Court held that a fully equipped cinema theatre let out for
showing films on a commercial basis. being of a running
cinema theatre fell out of the scope of accommodation on the
score that costly fittings, fixtures and equipment could, in
no sense, be regarded and meant for the beneficial enjoyment
of the building in which the cinema theatre was housed. The
primary object and the definitional language used dctermine
the issue.
Respondent’s counsel did try to approximate the
definition in the Act to that found in the enactments with
reference to which decisions in his favour had been
rendered. We do not agree. To hair-split is an unhappy
interpretative exercise. Here the plain intendment is to
encompass leases of building only (inclusive of what renders
them more congenial) but not of businesses accommodated in
buildings nor of permises let out with the predominant
purpose of running a business. A lease of a lucrative
theatre with expensive cinema equipment, which latter
pressed the
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lessee to go into the transaction, cannot reasonably be
reduced into ; mere tenancy of a building together with
fittings which but make the user mole comfortable.
For these reasons we hold that the lease sued on does
not fall within the scope of the definition of
‘accommodation’. The appellant is, therefor, entitled to a
decree for eviction, in allowance of his appeal.
The further question is as to whether the new Act which
came into force in July 1972 applies to the present
proceedings does not arise, although Shri R. K. Garg, for
the appellant, relied upon express exclusion of cinemas by
the new enactment. He also relied upon the ruling of this
Court in Qudratullah v. Bareilly Municipality(1). We are not
considering this argument or the counter-submissions made by
Shri Tarkunde in this connection because the old Act itself
does not cover the suit lease.
The short surviving point that remains is about the
mense profits. lt is admitted by the respondent that he has
been making a net income of Rs. 2,000/-. Adding Rs. 1,400/-
which is the net rent under the Lease, mense profits at Rs.
3,400/- have been claimed by the appellant. It may not
be quite correct to read into the admission a ‘net income’
although Shri Garg would have us do so. It may be more
appropriate to direct the trial court to fix the mense
profits to be decreed from the date of the suit.
In the circumstances of the case we direct that on
account of the uncertain position of the law and devergent
decisions of courts, the parties do pay and bear their
respective costs throughout.
A long-standing running cinema with outstanding
contracts with film distributors cannot be uprooted
overnight without considerable financial and business trauma
to the affected party. It is but fair that we grant one
year’s time for the respondent to vacate the premises.
P.B.R. Appeal allowed
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