Delhi High Court
Gujarat State Fertilizers vs S.M. Aggarwal & Anr. on 1 December, 1998
Equivalent citations: 1999(49)DRJ448
Author: Manmohan Sarin
Bench: Manmohan Sarin
ORDER Manmohan Sarin, J.
1. Does a company on taking a premises on rent for residence of any of its officers render itself liable for eviction from the existing residential premises in its tenancy on the grounds of having acquired an alternative residential accommodation under Clause (h) of proviso to Section 14(1) of the Delhi Rent Control Act? This important question arises for consideration in this petition. Besides, the pleas of unsuitability of the acquired accommodation and the effect of covenant of restrictive user are sought to be raised in this petition.
2. Challenge in the petition is to an order dated 10.11.1997 of the Rent Control Tribunal in RFA. 615/96. The learned Rent Control Tribunal dismissed the appeal preferred by the petitioner and affirmed the order of eviction in respect of tenanted premises, viz. the first floor of property bearing Municipal No. 74, Sundar Nagar, New Delhi, passed by the learned Additional Rent Controller under Section 14(1)(h) of the Delhi Rent Control Act (hereinafter referred to as the 'Act').
3. The learned Additional Rent Controller and the learned Rent Control Tribunal upheld the respondent's case that petitioner company had taken on lease and acquired vacant possession of residential premises No. K-15, NDSE-II, New Delhi, as well as residential premises No. IE/79, Lajpat Nagar, New Delhi, after the premises in suit, viz. first floor of property No. 74, Sundar Nagar, New Delhi had been let out by the respondent landlady to it. The order of eviction under Clause (h) of the proviso to Section 14(1) of the Act was, therefore, passed.
4. Facts giving rise to the present petition may be briefly noted:-
(i) By a lease deed dated 4.10.1972, the respondent let out to the petitioner for residence the first floor of property No. 74, Sundar Nagar, New Delhi on a monthly rental of Rs.1,500/- per month plus Rs. 200/- for fittings and fixtures. The lease deed was renewed with effect from 1977 for a further period of five years with monthly rental of Rs. 2,200/- and the tenancy continued thereafter.
(ii) Petitioner tenant had also taken on rent residential premises No. K-15, NDSE-II, New Delhi for residential use of Chief of its New Delhi Office. The earlier lease dated 10.8.1983 expired on 31.7.1986 and fresh lease dated 8.8.86 for a period of three years, at a rental of Rs. 3,000/- per month, inclusive of Rs.5000/- for amenities provided (Ex. RW.1/1). The lease was renewed for a further period of one year with effect from 1.8.1989 at a rental of Rs. 4,000/- per month.
(iii) Petitioner tenant had also taken on rent residential premises No. 1E/79, Lajpat Nagar, New Delhi, vide an agreement dated 24.3.1986, Exhibit RW.1/3 for the residence of its Sales Engineer, Mr. P.S. Ambegaonkar for a period of three years.
(iv) It is claimed that possession of both the aforesaid premises has since then been handed over to the respective landlord/land-lady.
5. The submission of the petitioner is that in these facts it cannot be said to have acquired vacant possession of a residence within the meaning of Clause (h) to the proviso of Section 14(1) of the Act. The precise argument being that it was not the petitioner company, but one or more of the specified officers/employees, who actually acquired vacant possession of the premises under the lease. The lease for premises No. K-15, N.D.S.E. Part-II, New Delhi specifically provided, "that the aforesaid premises are leased for the residential use of the Chief of the New Delhi office of the company. On the expiry of lease, the lessee shall hand over the vacant possession of the above premises to the lessor peacefully along with all fittings and fixtures..........". The lease was further renewed having the aforesaid clause on 9.8.1989. Similarly, Premises No. 1E/79, Lajpat Nagar, New Delhi were also leased by respondent-landlady only for the residential use of the Sales Engineer, Sh. P.S. Ambegaonkar, It is claimed that the petitioner company did not even have the legal right of possession, much less actual possession in respect of the aforesaid two premises. It is further claimed that assuming the petitioner had legal right under the lease documents, it certainly did not have the actual vacant possession in respect of the premises, which vested with the Chief of the New Delhi Office in case of K-15, N.D.S.E. Part-II or the Sales Engineer is case of 1E/79, Lajpat Nagar, New Delhi. Reliance is also placed on dhistra Vs. Ashok Kumar , in support of the submission that there is a distinction between legal right of possession and actual vacant possession. It is urged that the petitioner though technically the lessee, was neither entitled to possession of the said premises nor had such actual possession and therefore, Clause (h) of the Proviso to Section 14(1) of the Act could not be availed of.
6. Learned counsel for the petitioner submitted that the petitioner did not acquire domain over the premises for use. In the absence of domain for use premises at K-15, N.D.S.E. Part-II and IE/79, Lajpat Nagar, New Delhi, could not be treated as alternative premises acquired for eviction from the premises in suit, namely 74, Sunder Nagar, New Delhi. The premises at K-15, N.D.S.E. Part-II and IE/79, Lajpat Nagar, New Delhi, in terms of the leases executed by the respective landlords, permit only the use of the premises for residence of the Chief of the New Delhi Office and the Sales Engineer respectively and not for the use of any other officer or employee of the petitioner. The leasing out of the premises with the aforesaid prohibition and restrictions could not be regarded as residences acquired by the petitioner company within the meaning of Section 14(1)(h) of the Act. The petitioner tenant's right to take on lease fresh premises could not be forfeited under Clause (h).
7. As regards the premises in suit, it is submitted that the petitioner company under the lease was entitled to use the tenanted premises for residential purposes. The use of the premises was not restricted and there was no prohibition with regard to the residential use by any of the officers/employees of the company. The landlady in fact had instituted proceedings against the petitioner company claiming mis-user of the premises for running of a Guest House and office premises. Pursuant to these proceedings and as per directions of the Apex Court, the petitioner company stopped the use of part of the premises as an office and has continued to use the tenanted premises as Guest House for the stay of its numerous officers, who come to Delhi from other towns. The petitioner company's directors, officers, employees and other connected with the company have been using the facility of Guest House for over the last two decades.
8. Learned counsel for the petitioner fervently submitted that Section 14(1)(h) of the Act should not be interpreted and implemented in a manner, which would render the petitioner company liable to eviction from all the tenanted premises under Section 14(1)(h) of the Act, of the event of the company acquiring vacant possession of a premises for the residence of one of its employees. To illustrate, a company to meet its growing requirements takes on rent a premises for the residence of one of its new officers, would it be open for each of the landlords whose premises are on rent with petitioner to seek eviction of the company on the ground that it has acquired a residence for the new officer? Learned senior counsel, Mr. Dave urged that in case it is so held then ground under Section 14(1)(h) of the Act, would be available to all the landlords and the company would not be able to retain any of the leased premises, a chain reaction could set in and continue till the company was left with only the newly acquired residence". Such a situation and result, it is argued could never have been intended.
9. Having noted with factual matrix of the case and legal submission of the petitioner, the prime question requiring consideration is:
"Whether the petitioner-tenant had acquired vacant possession of the premises at K-15, N.D.S.E. Part-II New Delhi and whether it had domain over the said premises?"
A perusal of the lease Ex. RW1 and Ex. RW1/3 clearly shows that the contracting parties are the landlords and the petitioner company. The petitioner company is described as the lessee.
The relevant clauses of the two leases may be noted:
Clause 4 of lease dated 8.8.1986 and lease Dated 9.8.1989 in respect of premises No. K-15, N.D.S.E. Part-II, New Delhi.
"That the aforesaid premises are leased to lessee for the residential use of the Chief of the New Delhi office of the company. On the expiry of the lease, the lessee shall hand over the vacant possession of the above said premises to the lessor peacefully along with all fittings and fixtures."
Clause 4 of lease dated 24.3.1986, in respect of premises No.1E/79, Lajpat Nagar, New Delhi.
"The premises will be used only for the residential stay of our Sales Engineer, Sh. P.S. Ambegaonkar."
Clause 8 of the lease dated 24.3.1986 in respect of premises No.1E/79, Lajpat Nagar, New Delhi.
"That the tenant shall not sub let, assign or part with possession of the aforesaid premises or any of without the written consent of the landlady and will not use the aforesaid premises for any purpose other than residence."
Lease Deed in respect of Premises No.1E/79, Lajpat Nagar, New Delhi.
"Landlady agrees to rent out and the tenant agrees to take on rent the premises hereunder described for the purposes of accommodation of its Sales Engineer."
10. From the lease terms noticed above, it would be seen that incase of K-15, N.D.S.E. Part-II, New Delhi, the premises had been taken for the residence of the Chief of the New Delhi Office of the Company. It follows that whoever is the incumbent Chief of the New Delhi office, he would occupy it.There is, however, no specific prohibition on the company for its use for purpose other than the residence of the Chief of the New Delhi office. While in the second case, the clause confining the use of the premises for the residence and stay of the Sales Engineer, Sh. P.S. Ambegaonkar. Furthermore, from perusal of these two leases, as noted above, it is clear that it is the petitioner company, who is the lessee and the premises are residential and have been taken on rent for use as residence. It goes without saying that the liability for payment of rent is that of the petitioner-lessee. It is the lessee, who is responsible for due performance of the covenants under the Lease Deed. In fact under the Lease Deeds apart from the lessee, no other party acquires an interest in the leased premises. The obligation to hand over vacant possession is also that of the lessee and not that of the concerned employee, who occupies, or uses the premises.
11. The crucial question that is to be considered is whether an exception from Section 14(1)(h) of the Act can be carved out for a company simply because it has chosen to accept a restrictive stipulation or a prohibition in the lease confining the use of the premises to a particular officer? The answer is in the negative. It cannot be made a ground for non application of Section 14(1)(h) of the Act. Besides, it cannot be said that in these cases the company did not acquire vacant possession. As noticed earlier, the obligation to hand over vacant possession in case the concerned officer/employee ceases to be in the employment of the company is that of the petitioner company, being the lessee/tenant. The concerned official or employee acquires no interest under the leases in the tenanted premises. In these circumstances, it cannot be held that the petitioner company had no domain of use or right over the premises or had not acquired vacant possession of the premises. Observations of the Apex Court in the Yudhistra Vs. Ashok Kumar (Supra) bringing out the distinction between legal right of possession and actual vacant possession were in a different context and cannot advance the case of the petitioner.
12. Learned counsel for the petitioner further submitted that even if it was held that the petitioner company had acquired possession of alternative premises, the question of its suitability would remain to be considered in as much as the remises in suit were in a posh area of Delhi, viz. Sunder Nagar and being used as a guest house/for the residence of employees and officers of the company on transit and on visit to Delhi. The alternative premises acquired were not suitable on this account. Besides, on account of the lease term and restrictive covenant regarding the use of the alternative premises by the designated named officers, the same could not be considered alternative or suitable residence.
13. Regarding the question of suitability of the acquired premises, it may be noted that Section 13(1)(h) of the Delhi and Ajmer Rent Control Act, 1952, specifically provided for it, viz.
"The tenant has whether or after commencement of the Act acquired vacant possession of or has been allotted a suitable residence."
In the Delhi Rent Control Act, 1958, the word 'suitable' prior to 'residence' was omitted. A Division Bench of the court in Indian Cable Co. Vs. Prem Chandra Sharma (1989) 39 DLT 89, noticing the omission of the word 'suitable' from Section 14(1)(h) of the Act, held that it was not even relevant whether the acquired property is a suitable substitute for the premises let out.
14. Learned counsel for the petitioner relies on certain observations of the Apex Court in Ganpat Ram Sharma Vs. Gayatri Devi and submits that the plea of suitability of the alternative premises is open to the tenant. The Apex Court had observed as under :
"Before we discuss the other aspect, the result of several decisions to which reference has been made above, indicates that the position in law is that the landlord in order to be entitled to evict the tenant must establish one of the alternative facts positively, either that the tenant has built or acquired vacant possession of or has been allotted a residence. It is essential that the ingredients must be pleaded by the landlord who seeks eviction but after the landlord has proved or stated that the tenant has built, acquired vacant possession of or has been allotted a residence, whether it is suitable or not and whether the same can be really an alternative accommodation for the tenant or not are within the special knowledge of the tenant and he must prove and establish those facts."
15. Taking a clue from the aforesaid observations, learned counsel for the petitioner argued that the acquisition of the premises at Lajpat Nagar and NDSE-II, New Delhi could not be considered alternative or suitable residence on account of their location and the fetter on their use. The above submission would not be of any avail to the petitioner. Petitioner did not lead any evidence with regard to the non-suitability of the alternative premises. In any case, it cannot, be claimed that the premises at K-15, NDSE-II, or at Lajpat Nagar, New Delhi, are not suitable for residence. Besides, simply because the premises were intended for use of a designated functionary and of a named officer, or the company of its own volition having accepted restrictive user, cannot render the alternative acquired premises unsuitable. There is, thus, no merit in this submission.
16. Coming to the last submission of learned counsel for the petitioner that the ground under Section 14(1)(h) of the Act should not be made applicable to a company hiring or taking on lease another premises to meet its growing needs. It was urged that a Company's need grow with the passage of time. It may be because of increase in its turnover and/or expansion of businesses. Alongwith the growth, the size and number of its offices and employees would grow. Consequently, the need for more premises would also grow, be it office or residential. Acquisition of new premises in such circumstances should not be considered as acquisition of alternative premises so as to attract Clause (h) of Section 14(1) of the Act. Learned counsel argued that if the ground under Section 14(1)(h) of the Act was to be made applicable then no company or corporation would be able to sustain the existing tenancies and they would be liable to eviction from one premises to another. It would have a chain reaction and it would continue till the corporation or company was left with just one residence. Such an interpretation would cause undue hardship on corporate tenants. Learned counsel argued that it was for this reason that this Court in Indian Cable Company Vs. Prem Chandra Sharma (supra) confined itself to only answering whether the proviso to Clause (h) of Section 14(1) applied to residential premises let out to a company or not? The other questions formulated in the said case and also arising in the present petition were left open.
17. The submission of learned counsel for the petitioner, on the first flush, appears to be plausible in as much as it is made to appear that hardship and injustice is caused to a company, which can be made to suffer eviction orders in respect of the existing premises rented out in the event of its leasing or acquiring vacant possession of additional premises.
18. The Delhi Rent Control Act was enacted to provide for controlling of rents and evictions in the Union Territory of Delhi. The Apex Court in B.R. Mehta Vs. Atma Devi has observed as under :
"The purpose of the Act is to control rents and eviction, in other words, to control unreasonable eviction, and to ensure that in an atmosphere of acute shortage of accommodation there is proper enjoyment of available spaces by those who want and deserve. In other words, to ensure that there is no unreasonable and unnecessary spaces in the hands of one tenant and other tenants and landlords need of occupation of spaces remains unsatisfied, Clause (h) of Section 14(1) is an attempt in a way to ration out accommodation between tenants and landlords."
The Delhi Rent Control Act also provide protection from eviction to economically weaker tenants. The legislature in fact by the amendment Act of 1988 removed the statutory protection from tenancies having rentals of over Rs.3500/- per month. The rationale of the amendment being that it is only economically weaker tenants not having the capacity to pay higher rental, who deserve the protection under the Act. The protection under the Act, therefore, is confined to deserving tenants with the low capacity to pay rentals. It is not intended for the benefit of large Corporations, who may be having numerous tenancies with low rentals. Although a company would come within the definition of a tenant as envisaged under Section 14(1)(h) of the Act and thereby entitled to the protection afforded.
19. The Division Bench of this Court in Indian Cable Company Vs. Prem Chandra Sharma (Supra) while considering whether a company would be a tenant for the purposes of protection under Section 14(1)(h) of the Act, observed as under:
"It is indeed essential to include a company which is generally more resourceful then a natural person, within Clause (h) to effectively restrict protection under this Clause to possession of only one residential premises and that too till the tenant has acquired vacant possession of, or has been allotted another residential accommodation in Delhi. Otherwise, the object and the purpose of this Clause would be defeated as a company could otherwise easily afford to take on rent any number of residential premises and thus deprive the really needy persons of a residence in Delhi."
The aforesaid observation of the Division bench succinctly sets out the rationale and object for considering the company as a tenant for the purposes of Section 14(1)(h) of the Act.
20. Let us consider the case of an individual or a sole proprietor having extensive business operations. He may have taken on rent in the name of his sole proprietorship concern a number of houses for use of persons managing his business. In case he acquires alternative possession of residence, he would be liable to eviction from the premises, which he may have earlier taken for residence of his managers. The rationale being that a person a entitled to protection of the statute only in respect of one residence. Can this protection, which is confined to one residence in the case of an individual be extended to manifold premises in the case of a company? The legislature has not made any provision for this. Besides, when the words of the statute are clear and unambiguous, the same cannot be run down or diluted by bringing an argument of purported hardship or injustice. Moreover, it would be seen that it is open to a large Corporation or company to take on rent premises at market rent, which are outside the Rent Control Legislation. This submission of the petitioner is also without merit.
21. In view of the foregoing discussion, I do not find any merit in the petition. The petition is dismissed. No order as to costs.