CASE NO.: Appeal (civil) 2031 of 2000 PETITIONER: LAXMIDAS BAPUDAS DARBAR AND ANR. Vs. RESPONDENT: SMT. RUDRAVVA AND OTHERS DATE OF JUDGMENT: 27/08/2001 BENCH: S.P. Bharucha, Y.K. Sabharwal & Brijesh Kumar JUDGMENT:
BRIJESH KUMAR, J.
The question that directly falls for consideration
in this appeal is whether or not, a petition under Section 21
(1)(h) of the Karnataka Rent Control Act, for eviction of a
tenant under a contractual fixed term lease, would be
maintainable on the ground of reasonable and bona fide
requirement of the landlord. On certain occasions earlier,
the question has been considered by this Court as well as
High Courts including Full Benches of the Karnataka High
Court but there does not seem to be a cohesion of views.
The brief factual background giving rise to the
point is that in the year 1905, the mother and guardian of
one Gurappa Channabasappa Belaguri, holding a power of
attorney, leased out his non-agricultural land to Anant
Parashuram Nagaonkar for a period of 99 years, to
establish a factory. In the year 1907, the lessee Nagaonkar
aforesaid, assigned the lease in favour of Ramdas Vithaldas
Darbar for a sum of Rs.8,500/- The original parties to the
agreements have all died and their heirs have stepped into
their shoes and they are parties to the present proceedings.
In the year 1986 the lessors served a notice to
the lessees calling upon them to vacate the premises on the
ground that the lessees did not pay rents for the period
1.3.85 to 31.3.86 and that the property was also bona fide
required for their occupation. Reply to the notice is said to
have been sent by the lessees denying default in payment as
alleged and asserted inter alia that the lessors had no right
to terminate the lease in view of the 99 years fixed term
lease under the agreement. Thereafter, however, the
lessors filed an application under Section 21(1)(h) and 21
(1)(p) of the Karnataka Rent Control Act 1961 on the ground
that the premises were bona fide required by them for
starting their own business.
The lessees contested the petition on the
ground that the fixed term lease was subsisting which
expires only on 29.2.2004. It was also pleaded that in
fact it was a perpetual lease which could not be terminated.
The trial court, namely, the District Munsif allowed the
petition and passed an order dated 2.3.1990 for eviction of
the lessees under clause (h) of Sub-section (I) of Section
21 of the Act holding that it was not a permanent lease and
that Section 21 of the Karnataka Rent Control Act would be
applicable to the lease in question.
Both parties preferred revision before the
District Court, the lessors against part of the order
rejecting their petition under Clause (p) of Section 21(1) of
the Karnataka Rent Control Act whereas the lessees against
the part of the order of evicting them under Cl. (h) of sub-
section (1) of Section 21 of the Act. The learned District
Judge held that it is a lease of permanent nature. Section
21 (1) of the Karnataka Rent Control Act therefore will not
be applicable. The order of the District Munsif was
reversed except the part by which eviction under Section
21 (1)(p) of the Act was refused.
The respondent-lessors preferred a revision
before the Honble High Court. It has been allowed, holding
that the Distt. Court erred in finding that the lease was
perpetual in nature. It is further observed that there
cannot be any presumption in favour of perpetual lease since
there should be clear and unambiguous language to infer
such a lease. The provisions of the Karnataka Rent Control
Act have been held to be applicable, de hors the contract
of lease and, the lessor has been found to be entitled to
move a petition for eviction of the lessee under Section 21
(1)(h) of the Act, even before the expiry of fixed term of
99 years.
A perusal of the judgment of the High Court indicates
that one of the two contentions raised before it was that
the finding of the District Court, holding that it was a
perpetual lease is erroneous. According to the lessor, the
lease was for a fixed period of 99 years. Alternatively, the
submission was even if it was a permanent lease, provisions
of Section 21 of the Karnataka Rent Control Act would be
applicable for seeking eviction of the lessee on the basis of
the provisions of the Statute. The High Court came to the
conclusion that lease in question is fixed term contractual
lease of 99 years with option of one renewal. It will
however not be necessary, for us, to go into the question
relating to perpetual or non-perpetual nature of lease in
view of submission made on behalf of the appellant that
their endeavour will be to show that the Karnataka Rent
Control Act would not apply even for termination of a fixed
term subsisting lease. Therefore, no submissions have been
made before us to show that the lease is a perpetual lease.
We would, therefore, proceed to examine the other
question relating to applicability of Section 21 (1)(h) of the
Karnataka Rent Control Act to a subsisting fixed term
contractual lease, as in the case in hand.
While dealing with the aforesaid question, the High
Court has relied upon a Full Bench decision of the Karnataka
High Court reported in AIR 1997 Karnataka 311 M/s.
Bombay Tyres International Ltd. versus K.S. Prakash,
where it has been held that a proceeding for eviction under
Section 21 of Karnataka Rent Control Act would be
maintainable notwithstanding the fact that the lease under
which tenant enjoys possession is an unexpired term lease.
The relevant paragraph from the Full Bench decision
aforesaid, is quoted below:
In view of what is stated above, we are
clearly of the opinion that the decision of
the Full Bench of this Court in Sri
Ramakrishna Theatres case ILR (1992)
Kant 1296: (AIR 1993 Kant 90), is no longer
good law in the light of the decision of the
Supreme Court in Sri Lakshmi
Venkateswara Enterprises case ILR (1994)
Kant 1659. Accordingly, we hold that a
landlord is entitled to an order of eviction
if he satisfies one or other conditions
mentioned in S.21 of the Karnataka Rent
Control Act notwithstanding the fact that
the lease under which the tenant is in
possession of the premises is for a term
and that it has not expired on the date
when the application for eviction is filed.”
It is clear that the Full Bench in Bombay Tyres
(supra) followed the decision of this Court in the case of
Sri Lakshmi Venkateshwara Enterprises Pvt. Ltd.Versus
Syeda Vajhiunnissa Begum reported in ILR (1994)
Karnataka 1659.
Sri Lakshmi Venkateshwara Enterprises (supra)
while holding that provisions of the Rent Control Act would
be applicable to a fixed term contractual lease relied upon a
decision reported in AIR 1979 S.C. 1745 Dhanapal
Chettiar versus Yesodai Ammal & Anr. It is further
observed in M/s. Bombay Tyres that interpretation of
Dhanapal Chettiars case given by the Supreme Court in
Sri Lakshmi Venkateshwara Enterprises (supra) is binding
on it. It will be beneficial to peruse Paragraph 15 of the
judgment in M/s. Bombay Tyres which is quoted below:
It was contended by the learned counsel
for the tenants that the decision of the
Supreme Court in Dhanpal Chettiars case
AIR 1979 S.C. 1745 is confined only to a
case of determination of a lease under
S.106 of the T.P. Act and that the
principles cannot be extended to cases
where a term is provided for in the lease.
Learned counsel also relied on various
observations of the Supreme Court in the
above decision in support of his case. But
we are afraid that we cannot accept the
contention of the learned counsel for the
tenants. In Sri Lakshmi Venkateshwara
Enterprises case (ILR (1994) Karnataka
1659), the Supreme Court has considered
the very same decision and has stated that
the above decision clearly holds that the
provisions of the Rent Control Act would
apply notwithstanding the contract. The
effect of the decision in Dhanpal Chettiars
case is stated by their Lordships of the
Supreme Court and we are bound by the
same. This Court cannot take a different
view as to what was laid down in Dhanpal
Chettiars case. What is decided in Dhanpal
Chettiars case is stated by their
Lordships in paragraph 11 of the Judgment
of Sri Lakshmi Venkateshwara Enterprises
case. It is to the effect that the
provisions of the Rent Control Act would
apply de hors the contract. When the
Supreme Court has laid down the law to
that effect, this Court has necessarily to
follow the same and we do so.
This necessarily leads us to see and find out the
proposition of law as laid down in the case of Dhanapal
Chettiar (Supra). It is a decision by a Bench of Seven
Judges. The facts being that the land-lady moved an
application for eviction of her tenant under the provisions
of Tamil Nadu Rent Act on the ground of her personal need.
The petition was dismissed. On appeal, though her case of
bona fide requirement was upheld but eviction was refused
due to lack of notice to quit in accordance with law. The
High Court dealing with the matter in revision, held that
notice to quit under Section 106 of the Transfer of
Property Act was not necessary for seeking an eviction of a
tenant under the provisions of the Rent Act. The question
therefore, as was under consideration before this Court is
mentioned in Para 1 of the judgment itself which is quoted
below:-
.as to whether in order to get a decree
or order for eviction against a tenant under
any State Rent Control Act, is it necessary
to give a notice under Section 106 of the
Transfer of Property Act.
It has been held that the purpose of giving a notice
under Section 106 of the Transfer of Property Act is only
to terminate the contract of tenancy but it would not be
necessary if the tenant incurs the liability of eviction under
the provisions of the Statute. In such a case the notice
under Section 106 of the Transfer of Property Act would
only be a formality and a surplusage and it need not be given
by way of any double protection to the tenant. It has been
further observed that even though tenancy may be
terminated by giving a notice under Section 106 of the
Transfer of Property Act yet the landlord will not be in a
position to initiate the proceedings for eviction in absence
of any liability incurred by the tenant as provided in the
Statute. Therefore, notice under Section 106 of the
Transfer of Property Act loses significance. In the end of
Para 18 of the judgment it has been observed as follows:
.But on the first assumption we have
taken a different view of the matter and
have come to the conclusion that
determination of a lease in accordance with
the Transfer of Property Act is
unnecessary and a mere surplusage because
the landlord cannot get eviction of the
tenant even after such determination. The
tenant continues to be so even thereafter.
That being so, making out a case under the
Rent Act for eviction of the tenant by
itself is sufficient and it is not obligatory
to found the proceedings on the basis of
the determination of the lease by issue of
notice in accordance with Section 106 of
the Transfer of Property Act:
It is to be significantly noted that in Para 5 of
the judgment in Dhanpal Chettiar case, this Court while
generally referring to the different provisions of the
Transfer of Property Act and the effect of the Rent Acts
of different States observed thus:
But in all social legislations
meant for the protection of the needy, not
necessarily the so-called weaker section of
the society as is commonly and popularly
called, there is appreciable inroad on the
freedom of contract and a person becomes
a tenant of a landlord even against his
wishes on the allotment of a particular
premises to him by the authority
concerned. Under Section 107 of the
Transfer of Property Act a lease of
immovable property from year to year, or
for any term exceeding one year, or
reserving a y early rent, can be made only
by a registered instrument. None of the
State Rent Acts has abrogated or affected
this provision. (emphasis supplied)
As a matter of fact the question of curtailment of fixed
term contractual lease was not involved in the case of
Dhanapal Chettiar (supra).
It has no where been held that by virtue of the
provisions of the Rent Act the contract of term lease is
completely obliterated in all respects. The effect of Rent
Act on tenancy under contract has been considered only to a
limited extent confining it to the necessity of giving notice
under Section 106 of the Transfer of Property Act.
Next we may consider the decision in the case of
Sri Lakshmi Venkateshwara Enterprises (supra) It was a
case relating to a term lease of 32 years. In paragraph 5 it
has been observed as follows:
This Court in V. Dhanapal Chettiar v.
Yesodai Ammal categorically laid down that
contractual tenancy will lose its significance
in view of the Rent Control Act. In that
case, even the notice under Section 106 of
the Transfer of Property Act was held to
be a surplusage. It is therefore urged that
if a landlord could found an action on any
one of the enumerated grounds under
Section 21 of the Act, the action would be
maintainable notwithstanding the existence
of the contractual lease.
The above observations have been made by referring the
decision in Dhanapal Chettiars case (supra) without taking
into account the context in which the Chettiars case was
decided. The Court then proceeds to consider Section 21 of
the Act which reads as under:
21. Protection of tenants against
eviction.- Notwithstanding anything
contained in any other law or contract, no
order or decree for the recovery of
possession of any premises shall be made by
any Court or other authority in favour of
the landlord against the tenant.
Provided that the Court may on an
application made to it , make an order for
the recovery of possession of a premises on
one or more of the following grounds only,
namely:- .. (Emphasis supplied)
On the basis of the above provision it has been observed
that anything contained to the contrary, in any contract
cannot be prevail.
It may have to be scrutinized as to what extent
the provisions of Section 21 of the Karnataka Rent Act shall
have an overriding effect over any other law or a contract.
The Rent Acts have primarily been made, if not wholly, to
protect the interest of tenants, to restrict charging of
excessive rent and their rampant eviction at will. In that
view of the matter Section 21 of the Karnataka Rent Act
provides that notwithstanding anything to the contrary
contained in any contract, no order for eviction of a tenant
shall be made by Court or any other authority. Undoubtedly,
it is a provision providing statutory protection to the
tenants as it is also evident from the heading of Sec.21 of
the Act. This prohibition is however relaxed under the
Proviso saying that an order for recovery of possession of
the premises can be made on an application made on that
behalf only on the grounds as enumerated in clauses (a) to
(p) to the Proviso. The non obstante clause contained under
Section 21 of the Act, will override any condition in any
contract which may provide a ground for eviction other than
those enumerated in Clauses (a) to (p) of Sub-section (1) of
Section 21. Such an additional ground in a contract shall be
rendered ineffective. The use of the word `only in the
Proviso is significant to emphasise that it relates to grounds
alone which cannot be added over and above as provided.
The whole contract or other conditions not related to
eviction or grounds of eviction shall not be affected. So far
a fixed term lease is concerned, it shall be affected only to
the extent that even after expiry of period of the lease the
possession cannot be obtained by the lessor unless one or
more of the grounds contained in Section 21 of the Act
are available for eviction of the tenant. There is nothing to
indicate nor it has been held in any case that in view of
Section 21 of the Karnataka Rent Act a contract of fixed
term tenancy stands obliterated in totality. As indicated in
the earlier part of this judgment in the case of Dhanapal
Chettiar it has been observed in Paragraph 5 that none of
the State Rent Acts have abrogated or affected the
provisions of Section 107 of the Transfer of Property Act
which provides for lease of immovable property from year
to year or for a term more than a year or reserving a yearly
rent. As indicated earlier, the Proviso to sub-section (1) of
Section 21 of the Karnataka Rent Act limits the grounds on
which landlord can seek eviction of a tenant. Nothing has
been indicated by reasons of which it can be concluded that
a contract of tenancy looses significance on coming into
force of the Karnataka Rent Act. The effect of non
obstante clause, in our view has been rightly explained in
the Full Bench decision in the case of Sri Ramakrishna
Theatres Ltd. versus General Investments and
Commercial Corporation Ltd. & Ors. AIR 1993 Karnataka
90 In one of the decision of this Court reported in 1989
(2) S.C.C. 686 Modern Hotel versus V.K.
Radhakrishnaiah, it has been held that period of a
subsisting lease for fixed term could not be curtailed in
absence of a forfeiture clause in the lease.
The effect of the non-obstante clause contained
under Section 21 of the Karnataka Rent Act on the fixed
term contractual lease may be explained as follows:-
(i) On expiry of period of the fixed term lease,
the tenant would be liable for eviction only on
the grounds as enumerated in Clauses (a) to
(p) of Sub-section (1) of Section 21 of the
Act.
(ii) Any ground contained in the agreement of
lease other than or in addition to the grounds
enumerated in Clauses (a) to (p) of Sub-
section (1) of Section 21 of the Act shall
remain inoperative.
(iii) Proceedings for eviction of a tenant under a
fixed term contractual lease can be initiated
during subsistence or currency of the lease
only on a ground as may be enumerated in
Clauses (a) to (p) of Sub-section (1) of Section
21 of the Act and it is also provided as one of
the grounds for forfeiture of the lease rights
in the lease deed, not otherwise.
(iv) The period of fixed term lease is ensured and
remains protected except in the case
indicated in preceding paragraph.
With great respect therefore, in our view, the
decision in the case of Dhanapal Chettiar (supra) has not
been correctly construed in the case of Sri Lakshmi
Venkateshwara Enterprises Pvt. Ltd. (supra) and it no
more holds good nor the Full Bench decision following it, in
the case of Bombay Tyres International Ltd. (supra). The
earlier judgment of the full Bench of the High Court in the
case of Sri Ramakrishna Theatres Ltd.(supra) lays down
the law correctly.
As a result of the discussion held above, the
impugned judgment of the High Court cannot be sustained.
The appeal is allowed and the judgment and order passed by
the High Court is set aside.
In the facts and circumstances of the case,
there would however be no order as to costs.
———————–J.
(S.P. Bharucha)
———————–J.
(Y.K. Sabharwal)
———————-J.
(Brijesh Kumar)
August 27, 2001
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