Karnataka High Court
A J Shetty And Co Pvt Ltd vs St Antonys Charity Institutes on 11 September, 2024
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RFA No.525/2018
C/w RFA No.2328/2019
RFA.CROB No.1/2019
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 11TH DAY OF SEPTEMBER, 2024
PRESENT
THE HON'BLE MRS JUSTICE K.S.MUDAGAL
AND
THE HON'BLE MR JUSTICE VENKATESH NAIK T
REGULAR FIRST APPEAL No.525/2018 (RES)
C/W
REGULAR FIRST APPEAL No.2328/2019 (SP)
RFA CROSS OBJECTION No.1/2019
RFA No.525/2018:
BETWEEN:
M/S A J SHETTY AND CO. PVT. LTD.
A COMPANY REGISTERED UNDER
COMPANIES ACT
C/O HOTEL MOTIMAHAL
MANGALURU - 575 001
REP. BY ITS MANAGING DIRECTOR
SRI A J SHETTY
S/O LATE SANKAPPA SHETTY
AGED ABOUT 75 YEARS
Digitally signed AND ALSO R/AT LAXMI
by PRABHU OPPOSITE COLACO HOSPITAL
KUMARA BENDORWELL, MANGALURU - 575 001 ...APPELLANT
NAIKA
Location: High (BY SMT.ANUPARNA BORDOLOI, ADVOCATE)
Court of
Karnataka AND:
ST ANTONY'S CHARITY INSTITUTES
JEPPU, MANGALORE
P B NO.506, JEPPU
MANGALURU - 575 001
A PRIVATE CHARITABLE TRUST
REPRESENTED BY
1. LORD BISHOP OF MANGALURU
PRESENT INCUMBENT BEING
MOST. REV. DR.PETER PAUL SALDANA
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RFA No.525/2018
C/w RFA No.2328/2019
RFA.CROB No.1/2019
AGED ABOUT 58 YEARS
S/O LAZARUS SALDANHA
REP. BY HIS GPA HOLDER
REV. FR. MAXIM GEZALD ROSARIO
AGED ABOUT 50 YEARS
S/O BONAVENTURU ROSARIO
R/AT BISHOPS HOUSE
MANGALURU - 575 003
2. ADMINISTRATOR AND DIRECTOR
PRESENT INCUMBENT BEING
REV. FR. JOHN BAPTIST CRASTA
AGED ABOUT 67 YEARS
S/O LEO CRASTA
R/AT ST.ANTONY'S CHARITY INSTITUTES
JEPPU, MANGALURU
P B NO.506, JEPPU
MANGALURU - 575 001
3. M/S KUDUPI SRINIVASA SHENOY & CO.
A PARTNERSHIP FIRM(REGD.)
HAVING REGISTERED OFFICE AT
NEW FIELD STREET
MANGALURU - 575 003
REP. BY ITS MANAGING PARTNER ...RESPONDENTS
(BY SRI UDAYA HOLLA, SENIOR COUNSEL FOR
SRI CYRIL PRASAD PAIS, ADVOCATE FOR C/R1 & R2;
NOTICE TO R3 HELD SUFFICIENT V/O DTD: 18.01.2021)
THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION 96
READ WITH ORDER XLIII RULE 1 OF CPC PRAYING TO SET ASIDE
THE JUDGMENT AND DECREE DATED 15.02.2018 PASSED IN O.S.
NO.144/2011 ON THE FILE OF THE III ADDITIONAL SENIOR CIVIL
JUDGE, MANGALORE, D.K. DECREEING THE SUIT FOR POSSESSION
AND MESNE PROFIT.
RFA No.2328/2019:
BETWEEN:
A J SHETTY & CO. PVT. LTD.
FALNIR ROAD
C/O HOTEL MOTIMAHAL
MANGALURU - 575 001
REP. BY ITS MANAGING DIRECTOR
A J SHETTY S/O LATE SANKAPPA SHETTY
AGED ABOUT 75 YEARS ...APPELLANT
(BY SMT.ANUPARNA BORDOLOI, ADVOCATE)
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RFA No.525/2018
C/w RFA No.2328/2019
RFA.CROB No.1/2019
AND:
ST. ANTONY'S CHARITY INSTITUTES
JEPPU
MANGALORE - 575 001
REP. BY ITS ADMINISTRATOR AND DIRECTOR
BEING REV. FR. DENIS MORAS PRABHU
S/O FRANCIS MORAS
P B NO.506, JEPPU
MANGALURU - 575 001 ...RESPONDENT
(BY SRI UDAYA HOLLA, SENIOR COUNSEL FOR
SRI CYRIL PRASAD PAIS, ADVOCATE)
THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION 96
OF CPC PRAYING TO SET ASIDE THE JUDGMENT AND DECREE
DATED 15.02.2018 PASSED IN O.S.NO.162/2014 ON THE FILE OF
THE III ADDITIONAL SENIOR CIVIL JUDGE, MANGALORE, D.K.,
DISMISSING THE SUIT.
RFA CROB No.1/2019:
BETWEEN:
1. ST.ANTHONY'S CHARITIES INSTITUTE
POST BOX NO.506, JEPPU
MANGALURU
A CHARITABLE TRUST REP. BY
LORD BISHOP OF MANGALURU
PRESENT INCUMBENT BEING
RT.REV.DR.PETER PAUL SALDANA
S/O LATE LAZARUS SALDANA
AGED ABOUT 54 YEARS
REP. BY HIS GPA HOLDER
REV. FR.WILLAM MENEZES
AGED ABOUT 60 YEARS
S/O LIGOURY MENEZES
R/AT BISHOP'S HOUSE
MANGALURU - 575 003
2. THE ADMINISTRATOR & DIRECTOR
PRESENT INCUMBENT BEING
REV.FATHER ONIL D'SOUZA
S/O BONIFACE D'SOUZA
AGED ABOUT 48 YEARS
R/AT ST.ANTHONY'S CHARITY INSTITUTE
JEPPU - 575 001, MANGALURU ...CROSS OBJECTORS
BY SRI UDAYA HOLLA, SENIOR COUNSEL FOR
SRI CYRIL PRASAD PAIS, ADVOCATE
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RFA No.525/2018
C/w RFA No.2328/2019
RFA.CROB No.1/2019
AND:
1. M/S. KUDPI SRINIVASA SHENOY & COMPANY
A PARTNERSHIP FIRM
HAVING ITS REGISTERED OFFICE
AT NEW FIELD STREET
MANGALURU -575 003
REP. BY ITS MANAGING PARTNER
2. M/S A.J.SHETTY AND COMPANY PVT. LTD.
A COMPANY INCORPORATED UNDER THE
PROVISIONS OF THE INDIAN
COMPANIES ACT, 1956
REP. BY ITS DIRECTOR
MR. A J SHETTY
AGED ABOUT 75 YEARS
S/O SANKAPPA SHETTY
CARRYING ON BUSINESS AT
MOTI MAHAL, FALNIR
MANGALORE - 575 001
AND R/AT "LAXMI"
OPP:COLACO HOSPITAL
BENDORWELL, MANGALURU ...RESPONDENTS
(BY SMT.ANUPARNA BORDOLOI, ADVOCATE FOR R2;
NOTICE TO R1 HELD SUFFICIENT V/O DATED 21.01.2020)
THIS REGULAR FIRST APPEAL CROSS OBJECTION IS FILED
UNDER ORDER XLI RULE 22 OF CPC PRAYING TO SET ASIDE THE
JUDGMENT AND DECREE DATED 15.02.2018 PASSED IN
O.S.NO.144/2011 ON THE FILE OF THE III ADDITIONAL SENIOR
CIVIL JUDGE, MANGALORE, DECREEING THE SUIT FOR POSSESSION
AND MESNE PROFITS AND DIRECT RESPONDENT NO.2 TO PAY
MESNE PROFITS AT RS.1,00,000/- PER DAY BY ENHANCING THE
SAME FROM RS.50,000/-.
THESE REGULAR FIRST APPEALS AND RFA CROSS OBJECTION
COMING ON FOR FURTHER HEARING, THIS DAY, JUDGMENT WAS
DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MRS JUSTICE K.S.MUDAGAL
AND
HON'BLE MR JUSTICE VENKATESH NAIK T
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RFA No.525/2018
C/w RFA No.2328/2019
RFA.CROB No.1/2019
ORAL JUDGMENT
(PER: HON'BLE MRS JUSTICE K.S.MUDAGAL) Challenging the common judgment and decree in O.S.No.144/2011 and O.S.No.162/2014, the parties therein have filed the above appeals and cross-objection. Particulars of the said cases are as follows:
Sl. Particulars O.S.No. Appellant/Cross Objector No. 1 RFA No.525/2018 144/2011 Defendant No.2 2 RFA No.2328/2019 162/2014 Plaintiff 3 RFA Crob.No.1/2019 144/2011 Plaintiff/Cross-objector
2. The appellant in R.F.A.No.525/2018 was defendant No.2, respondent Nos.1 and 2 were the Administrators of the plaintiff Charitable Trust and respondent No.3 was defendant No.1 before the Trial Court. Parties are referred to henceforth according to their ranks in R.F.A.No.525/2018.
3. The brief facts of the case are as follows:
(a) Subject matter of both the suits is as follows:
Immovable property situated at Attavar Village of Mangalore Taluk within Falnir Ward of Mangalore City Corporation and within the Registration Sub-District of Mangalore City and comprised in:
-6- NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 Item RS. No. TS NO. Extent No. A/C 1 173-A2 15-A2 1-18.50 2 174 16 0.52 Total 1-70.50 Item Nos.1 and 2 form a compact block.
(b) The said property belonged to Milagres Church. The said institution transferred the property to the Private Trust on perpetual lease/mulageni under the deed dated 20.08.1912.
The said land consisted of coconut and arecanut garden. Under the registered lease deed dated 23.09.1961, Trust of respondent Nos.1 & 2 let out the said property to respondent No.3 by name M/s. Kudupi Srinivasa Shenoy and Co., for term of 50 years on a monthly rent of Rs.852.50/-. Under the said lease, lessee was authorized to construct building and make other improvements to generate income. Respondent No.3 was also authorized to sub lease the property or assign his interest in the property. The said M/s.Kudupi Srinivasa Shenoy and Co., in turn under the registered document dated 03.02.1984 (Ex.P2) styled as sale deed, assigned its rights of tenancy to the present appellant.
(c) The terms of the first lease dated 23.09.1961 expired on 22.09.2011. In the meanwhile, on 11.04.1986, appellant wrote letter Ex.P22 to Trust of respondent Nos.1 & 2 -7- NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 purportedly seeking fresh lease. Trust of respondent Nos.1 & 2 by reply dated 05.06.1986 (Ex.P23) declined the request of the appellant for extension of said period. Before expiry of the lease, the appellant by letter dated 12.10.2009 (Ex.P3) again sought extension of lease for another 50 years. Trust of respondent Nos.1 & 2 by letter dated 08.02.2010 (Ex.P4) declined extension of lease and called upon the appellant to hand over possession of the property. There were similar correspondences as per Exs.P6, P8, P10, P11, P14, P15 and P16 between the appellant, the Trust and Church seeking extension of lease and denying the same.
(d) Ultimately on 12.10.2011 respondent Nos.1 & 2 filed O.S.No.144/2011 before III Additional Senior Civil Judge, Mangalore for ejectment and mesne profits against the appellant and respondent No.3 M/s.Kudupi Srinivasa Shenoy and Co.
(e) Appellant filed O.S.No.165/2012 before the Principal Civil Judge (Junior Division) & JMFC, Mangalore seeking specific performance of the contract. In the said suit, the appellant contended that as per Clause 4 of lease deed Ex.P1, Trust of respondent Nos.1 & 2 were required to give option to the appellant/lessee for renewal of lease for further -8- NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 period. Therefore, he filed the suit exercising such right. Subsequently, O.S.No.165/2012 was transferred to the Court of III Additional Senior Civil Judge, Mangalore for adjudication along with O.S.No.144/2011. On such transfer, the transferred suit was renumbered as O.S.No.162/2014.
4. The Trial Court consolidated both the suits and recorded common evidence. Trust of respondent Nos.1 & 2 denied interpretation of Clause 4 of the lease deed and right of the appellant seeking specific performance. Similarly, in O.S.No.144/2011 the appellant challenged the right of Trust of respondent Nos.1 & 2 to seek decree for possession and claimed that the appellant is entitled for specific performance and extension of lease for another 50 years.
5. Based on the pleadings of the parties, in both cases, the Trial Court framed the following issues and additional issues:
Issues framed in O.S.No.144/2011
1. Whether the plaintiff proves that the defendants are liable to surrender vacant possession of the suit schedule premises?
2. Whether the defendants are liable to pay mesne profits at the rate of Rs.1,00,000/- per day from 23.09.2011?-9-
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3. Whether the defendants are liable to pay interest at the rate of 18% p.a. on mesne profits?
4. Whether the defendants are liable to pay damages?
5. Whether the suit is overvalued so as to bring it within the jurisdiction of this Court?
6. What order or decree?
Additional Issue framed on 15.10.2014:
1. Whether the defendant No.2 proves that the lease agreement entered between the parties to the suit is compulsorily renewable?
Additional Issue framed on 27.11.2017:
1. Does plaintiff prove that it is a Charitable Institution and that the suit property was let out for commercial purpose and for these reasons Karnataka Rent Act is not applicable to the suit property as pleased in para 14 of the plaint?
Issues framed in O.S.No.165/2014:
1. Whether the plaintiff proves that by virtue of sale deed dated 03.02.1984 plaintiff has acquired right to seek renewal of lease?
2. Whether the plaintiff proves that he has been ready and willing to perform his part of the obligation?
3. Whether the plaintiff is entitled to seek specific performance of the agreement to renew the lease?
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4. Whether the defendant proves that the clause of lease deed enabling renewal of lease is ambiguous and unenforceable?
5. Whether the plaintiff is entitled for the relief as prayed in the plaint?
6. What order or decree?
6. Parties led common evidence. On behalf of respondent Nos.1 & 2, PW.1/respondent No.2 was examined and Exs.P1 to P33 were marked. On behalf of the appellant, the appellant was examined as DW.1 and Exs.D1 to D4 were marked. M/s.Kudupi Srinivasa Shenoy & Co., which was defendant No.1 in O.S.No.144/2011 did not contest the suit.
7. The Trial Court on hearing the parties, by impugned common judgment dismissed O.S.No.162/2014 and decreed O.S.No.144/2011. The Trial Court directed the appellant to handover vacant possession of the suit schedule property within 30 days. The Trial Court further directed that the appellant and respondent No.3 shall pay mesne profits at the rate of Rs.50,000/- per day from 03.09.2011 to 01.10.2011 and also from the date of suit, till the date of delivery of possession of the property and awarded interest at the rate of 15% on mesne profits.
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8. Appellant filed the above appeals challenging dismissal of the suit in O.S.No.162/2014 in R.F.A.No.2328/2019 and decree in O.S.No.144/2011 in R.F.A.No.525/2018. Respondent Nos.1 & 2 filed cross-objection in R.F.A.Crob.No.1/2019 questioning adequacy of mesne profits awarded in O.S.No.144/2011.
Submissions of Smt.Anuparna Bordoloi, learned Counsel for the appellant:
9. The findings of the Trial Court that under Ex.P1 the appellant did not become lessee, therefore he is not entitled to seek specific performance is arbitrary, illegal and contrary to the terms of Ex.P1. The finding of the Trial Court that there was no privity of contract is also unsustainable, as Trust of respondent Nos.1 & 2 has recognized the tenancy by accepting the rents for many years. The Trial Court was not justified in dismissing the claim for specific performance on the ground that Trust of respondent Nos.1 & 2 were required to take permission of the District Judge/Court to lease its property. As Trust of respondent Nos.1 & 2 is not a Public Charitable Trust, Section 36 of the Indian Trust Act, 1882 ('Trust Act' for short) is not applicable. Similarly, rejection of the prayer for specific performance on the ground of undue hardship to Trust of
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NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 respondent Nos.1 & 2 or unfair advantage to the appellant is also unsustainable. For assessing mesne profits, as per Order XX Rule 12 of CPC, separate enquiry needs to be conducted. The Trial Court was in error in granting mesne profits without any such enquiry. No evidence was adduced on the side of respondent Nos.1 & 2 to prove mesne profits. Thus the impugned judgment and decree for ejectment and dismissal of the suit for specific performance are liable to be set aside. Appellant's suit be decreed and the suit of respondent Nos.1 & 2 for ejectment and mesne profits be dismissed.
10. In support of her submissions, she relies on the following judgments:
1. Secy. Of State v. Digambar Nanda and ors1
2. Maharaja Bahadur Sir Prodyot Coomar Tagore v.
Maynuddin Mia and ors.2
3. Radha Kamal v. Puri Municipality and ors.3
4. Ramesh Chandra Das v. Atul Chandra Sarkar4
5. Syed Jaleel Zane v. P.Venkata Murlidhar and ors.5
6. Girindra Chandra Das v. Kamini Nath Roy and Ors.6
7. H.V.Rajan v. C.N.Gopal and ors.7
8. Delhi Development Authority v. Durga Chand Kaushish8 1 1917 SCC OnLine Cal 458 2 1938 SCC OnLine Cal 204 3 1953 SCC OnLIne Ori 32 4 AIR 1959 Gau 22 5 1980 SCC OnLine AP 26 6 1949 SCC OnLine Gau 29 7 1959 SCC OnLine Kar 125 8 (1973) 2 SCC 825
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9. State of U.P. and ors. v. Lalji Tandon9
10. Damodhar Tukaram Mangalmurti and ors v. State of Bombay10
11. Khivraj Chordia v. Esso Standard Eastern Inc.11
12. The Trustees of Port of Tuticorin v. The Tuticorin Salt and Marine Chemicals Ltd.12 Submissions of Sri Udaya Holla, learned Senior Counsel appearing on behalf of Sri Cyril Prasad Pais, learned Counsel for respondent Nos.1 and 2 on record.
11 (a). Admittedly, term of lease expired on 22.09.2011. Clause regarding option of renewal was available only to the original lessee (respondent No.3) and not the appellant. Even otherwise, the clause was ambiguous, as terms of lease and rate of rent were not specified in the said Clause. Such agreement cannot be specifically enforced. As the term of lease had completed, the appellant was bound to handover vacant possession of the property. Appellant had enjoyed the property for a period of 27 years and amassed huge wealth out of the income generated from suit schedule property. Whereas, Trust of respondent Nos.1 & 2 is charitable trust catering to the needs of the destitute and underprivileged. To serve the said cause, the Trust of respondent Nos.1 & 2 need funds. 9 (2004) 1 SCC 1 10 AIR 1959 SC 639 11 AIR 1975 Madras 374 12 (1975)12 MAD CK 0039
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NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 Therefore, they sought possession of the said property. Extension of lease or granting specific performance causes undue hardship to Trust of respondent Nos.1 & 2 and gives unfair advantage to the appellant. Even assuming that agreement is specifically enforceable, decree for specific performance is not straight jacket formula. As per Section 20 of the Specific Relief Act, 1963 ('the Act' for short), the Court has to exercise discretion subject to the rigors specified therein. The Trial Court on sound appreciation of the materials on record and law on the point has exercised its discretion in rejecting specific performance. The same does not suffer any arbitrariness.
(b) The evidence of the appellant himself shows that he was earning Rs.1,000/- to Rs.4,000/- per day for one room and the property consists of 110 rooms, 2 banquet halls and marriage hall/kalyan mantapa. He admitted that he was collecting Rs.75,000/- per programme held in the community centre/kalyan mantapa situated in the suit property and there used to be 5 to 10 functions per month. That goes to show that the property was generating huge income. Under the circumstances, there was no need to direct to hold separate enquiry. Order XX Rule 12(1)(ba) of CPC gives discretion to the
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NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 Court either to pass decree for mesne profits or direct enquiry in the matter. Since there was sufficient evidence on record, the Trial Court was justified in not directing separate enquiry for mesne profits. However, having regard to the evidence on record, mesne profits granted by the Trial Court is on the lower side and that needs to be enhanced and the Trial Court should have awarded mesne profits at the rate of Rs.1,00,000/- per day.
(c) The conduct of the appellant also disentitles him the relief of specific performance. Without knowledge and consent of respondent Nos.1 & 2, the appellant has mortgaged the property to Canara Bank for the loan borrowed by him, thereby creating interest in the property in favour of third party. For a Trust like respondent Nos.1 & 2, which is serving noble cause of the society, the Court shall exercise parens patriae jurisdiction. Due to illegal actions of the appellant, the suit property was attached by Excise Department for recovery of Rs.18 crores. As long back as in the year 1986 itself, Trust of respondent Nos.1 & 2 had declined to grant extension of lease and renewal of lease. The appellant filed the suit in the year 2012. Therefore the suit was clearly barred by time. Under the aforesaid circumstances, the appeals of the
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NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 appellant are liable to be dismissed and cross-objection be allowed.
12. In support of his submissions, he relies on the following judgments:
1. Executive Officer, Arthanareswarar Temple v R Sathyamoorthy and ors.13
2. Swami Shankaranand (dead) by Lrs. v. Mahant Sri Sadguru Sarnanand and Ors.14
3. Shanti Prasad Devi v. Shankar Mahto15
4. Messrs. The United Plantations and Industries v. Messrs.
Tata Tea Ltd., a Public Limited Liability Co.,16
5. Her Highness Maharani Shantidevi P Gaikwad v.
Savjibhai Haribhai Patel and ors.17
6. Parakunnan Veetill Joseph's Son Mathew v. Nedumbara Kuruvila's Son and ors.18
7. S.Kugashankar v. Subhash Chand Goel19
8. The Special Land Acquisition Officer, UKP, Bagalkot v.
Malakajayya Mallayya20
9. Union of India v. Karnataka Electricity Board21
10. Smt.Shakuntala v. Narayan Gundoji Chavan22
11. Special Land Acquisition Officer v. Gurappa Channabasappa Paramaj23
12. Prabhakar Telkar (since deceased) by Lrs. v. 24
Vijayakumar and ors.
13 (1999) 3 SCC 115 14 (2008) 14 SCC 642 15 (2005) 5 SCC 543 16 1985 SCC OnLine Mad 66 17 AIR 2001 SC 1462 18 1987(Supp) SCC 340 19 ILR 2006 KAR 3689 20 ILR 1996 KAR 1639 21 ILR 1987 KAR 2552 22 (1999) 8 SCC 587 23 ILR 1991 KAR 1109 24 2010 SCC OnLine KAR 5261
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13. Fateh Chand v. Balkishan Dass25
14. Smt.Purificacao Fernandes and anr. v. Dr.Hugo Vicente de PerpetuoSocorro Andrade Menezes and ors.26
15. Nagamony Kumaraswamy v. S.Thiruchittambala27
16. Ganesh Prasad Varma v. Goverdhan Dass28
17. Hardesh Ores(P) Ltd. v. Hede and Company29
18. K Narendra v. Riviera Apartments (P) Ltd.30
19. Raghuram Rao v. Eric P.Mathias31
20. Maistry Thimmaiachar Choultry Trust ® Regd. v.
C.Channa Krishna32
21. Mahant Som Giri v. Mahant Ram Ratan Giri33
22. Phulchand Lakhmichand Jain v. Hukumchand Gulabchand Jain34
23. J.M.Construction Pvt. Ltd. v. Krishna Sachdev35
13. On hearing both sides and on examining the materials on record, the points that arise for determination of this Court are:
(i) Whether Clause 4 of Ex.P1 lease deed dated 23.09.1961 enables the appellant to seek specific performance of the contract for extension or renewal of the lease?25
AIR 1963 SC 1405 26 AIR 1985 Bombay 202 27 AIR 1953 Travancore-Cochin 369 28 AIR 1975 Allahabad 146 29 (2007) 5 SCC 614 30 (1999) 5 SCC 77 31 (2002) 2 SCC 624 32 RFA.269/2011 DD 13.06.2014 33 1941 SCC Online ALL 56 34 1959 SCC Online Bom 72 35 MANU/DE/0017/2016
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(ii) Whether the Trial Court committed any illegality or perversity in refusing to exercise discretion for grant of specific performance?
(iii) Whether the suit for specific performance was barred by time?
(iv) Whether mesne profits awarded at the rate of Rs.50,000/- per day is sustainable?
Analysis Reg. Point Nos.1 and 2:
14. Though the matter was argued at length, good number of facts are undisputed. Appellant does not dispute that the suit property belonged to Milagres Church and Trust of respondent Nos.1 & 2 acquired the said property under registered perpetual lease deed/Mulageni dated 20.08.1912. Trust of respondent Nos.1 & 2 executed term lease deed as per Ex.P1, wherein the property was given on lease for a term of 50 years on monthly rent of Rs.852.50/- to respondent No.3. Respondent No.3-M/s.Kudupi Srinivasa Shenoy & Co., in turn executed registered document dated 03.02.1984 as per Ex.P2 assigning its rights to the appellant for remaining period of lease. Ex.P2 is titled as sale deed, projecting as if entire title of the property is transferred under the said document. Practically that is only a document of assignment of leasehold rights of
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NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 respondent No.3 in favour of the appellant. The term of the lease expired on 22.09.2011 by efflux of time. Earlier on 12.10.2009, the appellant under Ex.P3 sought renewal of lease and Trust of respondent Nos.1 & 2 by letter Ex.P4 dated 08.02.2010 declined the same.
15. To urge lack of privity of contract for the appellant to enforce the terms of Ex.P1, it was contended that only respondent No.3-M/s.Kudupi Srinivasa Shenoy & Co., was entitled to enforce the term and not its assignee i.e. the appellant. However, the said contention deserves only rejection because in the preamble of Ex.P1 while defining lessee and lessor it is stated that "the expression lessors and lessees shall mean and include their heirs, representatives, successors, executors, administrators and assigns."
16. Clause 4 of the said agreement states that lessee shall be liable to surrender possession of the demised property on expiry of 50 years and the lessor shall give lessee the option to renew the lease for such further period as may be agreed between the lessor and the lessee. Coupled with that, after the original tenant assigning its leasehold rights under Ex.P1 to the appellant on 03.02.1984, for more than 20 years, Trust of respondent Nos.1 & 2 has accepted the rent from the
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NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 appellant and thereby recognized the appellant as lessee/assignee of original tenant. Therefore, there is no merit in the contention that there was no privity of contract. Despite that, the question is whether the appellant is entitled to seek specific performance based on Clause 4 of the agreement.
17. Clause 4 of the term lease deed Ex.P1 reads as follows:
"4. That the Lessees shall be liable to surrender possession of the said demised property together with all buildings or other improvements effected by them to the Lessors on the expiry of fifty years from the date of this Lease Deed without claiming any compensation for any of the improvements or buildings and without raising any objection. However, the Lessors shall give the Lessees the option to renew the lease for such further period as may be agreed between the Lessors and the Lessees in case the Lessees are agreeable to pay a fair and reasonable rent fixed by the Lessors depending upon the nature of the buildings, the demand and circumstances of the time."
(Emphasis supplied)
18. Though in the aforesaid clause there is mandate that the lessor has to give lessee an option for renewal of the lease, the said clause does not provide what should be the period of such renewal and the rate of rent etc. Thus the terms of proposed renewal were uncertain.
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19. As rightly pointed out by Sri Udaya Holla, learned Senior Counsel, specific performance can be enforced only where the terms of the contract are unambiguous. The Hon'ble Supreme Court in Shanti Prasad Devi's case referred to supra in similar circumstances has held that, when the terms and conditions of renewal contained in the lease deed is not specific, it amounts to ambiguity. In such cases, having regard to Section 14(1)(b) of the Act (as in force at the relevant time), said agreement could not be legally enforced. Therefore, mere mandate to respondent Nos.1 & 2 for giving option to the appellant for renewal of lease would not take further, as terms regarding the period of renewal and rate of rent were uncertain.
20. Further, specific performance of the contract cannot be granted merely because it is lawful to do so. Section 20(2) of the Act has placed certain embargo in considering exercise of discretion to grant specific performance. Section 20(2)(a) to (c) of the Act which are relevant for the purpose of these cases read as follows:
"20(2) The following are cases in which the court may properly exercise discretion not to decree specific performance:--
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(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or
(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff; or
(c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance."
21. Clause (a) of the aforesaid Section shows that the terms of the contract or conduct of the parties at the time of entering into contract or other circumstances have to be considered and if the contract gives unfair advantage to the plaintiff over the defendants, then specific performance cannot be granted. Similarly, Section 20(2)(b) of the Act says where the performance of the contract involves hardship to the defendant, the same cannot be granted and if granted such relief is inequitable.
22. This Court has to examine this matter in the light of the above said provisions. Innumerable judgments are relied by learned Senior Counsel and learned Counsel for appellant on
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NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 this aspect. Ex.P1 which is a document admitted by both side itself states that respondent No.1 is a Private Trust. The evidence of PW.1 that respondent No.1 Trust is a Charitable Institution running Ashram for poor, downtrodden, destitute and orphans and is providing free food, shelter, clothes and medicines to the inmates of the Ashram is not denied in the cross-examination. It is the case of respondent Nos.1 & 2 that by evicting the appellant, it wanted to augment its income and the appellant has thrived by utilizing the said property for more than 26 years. Admittedly, the building i.e., hotel, lodging and community halls in the suit schedule property were constructed by original lessee. Admissions of DW.1 show that after taking suit schedule property on lease, he has constructed hotels, started medical and dental colleges by spending Rs.500 crores. Whereas, Trust of respondent Nos.1 & 2 is serving a public cause and has derived rent of only Rs.825.50/- since 1961 till 2011, though money value has shot up to the sky during the said period, it would be unjust to direct the Charitable Institution which is serving public cause to extend the lease again at the same rate or even if at Rs.50,000/- per month as offered by the appellant.
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23. Second ground for rejection of specific performance is that for granting any lease, permission of the District Judge under Section 36 of the Trust Act is required. It is contended that respondent No.1 is Private Trust, therefore such permission is not required. Exception to Section 36 of the Trust Act bars a Trustee from leasing the trust property for a term exceeding 21 years, unless such trustee is permitted by the Principal Civil Court of original jurisdiction. There is no dispute that Trust Act is applicable where the suit property situates. The appellant has neither pleaded nor adduced any evidence to claim that the Trust of respondent Nos.1 and 2 falls within the Savings Clause of Section 1 of the Trust Act. Ex.P20 is the affidavit filed by the original lessee before the District Judge in the proceedings which were initiated by the Trust seeking permission of the said Court to let out the property in the year 1961. Thus there is a clear admission on the part of predecessor in title of the appellant that the Trust was governed by the Trust Act. In para 3 of the affidavit Ex.P20, original lessee himself has undertaken that he will surrender the property to the lessor on termination of the lease. Therefore, the plaintiff/appellant being his assignee is bound by the said Clause and is estopped from claiming that Section 36
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NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 of the Trust Act is not applicable and rejection of the specific performance on that ground is unsustainable. Moreover, the appellant himself did not plead and prove that the Trust in question was covered under the Savings Clause of Section 1 of the Trust Act.
24. Comparative position of the parties shows that the appellant has thrived a lot by exploiting the properties, whereas respondent Nos.1 & 2/Charitable Institution has lived in penury receiving only Rs.825.50/- for 50 years. Under the circumstances, if specific performance is granted, certainly that causes hardship to Trust of respondent Nos.1 & 2 and that amounts to unfair advantage to the appellant over Trust of respondent Nos.1 & 2. Under the circumstances, it is inequitable to direct respondent Nos.1 & 2 to extend the lease for any further period. Moreover, 14 years in this proceeding is already spent out. On that ground also, we are not inclined to interfere with the judgment of the trial Court.
25. Having regard to the fact that the appellant wants to exploit the property for commercial purpose, whereas Trust of respondent Nos.1 & 2 want to utilize the property to cater to the needs of the destitute, abandoned and poor people, this Court has to exercise parens patriae jurisdiction as held by the
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NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 Hon'ble Supreme Court in paras 17 and 11 of the judgments in Executing Officer, Arthanareswarar Temple's and Swamy Shankaranand's cases respectively referred to supra.
26. The Trial Court considering all the aforesaid facts and circumstances has rightly exercised discretion to reject the relief of specific performance. There is no arbitrariness or illegality in the said order of the trial Court. Reg. Limitation:
27. It was contended that Trust of respondent Nos.1 & 2 declined to extend the lease or renewal of lease as long back as in the year 1986 under Ex.P22, but the suit is filed in the year 2012, therefore the suit was barred by time. Per contra, learned Counsel for the appellant submits that as per Article 54 of the Limitation Act, 1963 (for short 'Limitation Act'), time starts to run from the date of expiry of term of lease and suit was in time. Therefore the trial Court was right in holding that the suit was in time.
28. Though it was contended that the issue of limitation was not raised in the trial Court by respondent Nos.1 & 2 the records show that though that was not pleaded in the written statement, the same was urged. Section 3 of the Limitation Act requires the Court to consider the issue of
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NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 limitation irrespective of parties not raising any plea on that point. Article 54 of the Limitation Act prescribes time for specific performance as three years from the date fixed for the performance, or if no such date is fixed, when the plaintiff has notice that performance is refused. Therefore there are two parts in the said Article.
29. In the present case, under Ex.P1 no date was fixed for specific performance. In Ex.P22 letter dated 11.04.1986 the appellant informing respondent Nos.1 & 2/lessor made the following statement:
"As you aware, the first lease deed between yourselves and M/s.Kudpi Srinivasa Shenoy & Co., completes 25 years as on 23.09.1986. Therefore we are interested in getting into a fresh lease deed agreement, between yourself and company with effect from 1st October 1986. ....................................................................................................."
30. For that Trust of respondent Nos.1 & 2 under Ex.P23 letter dated 05.06.1986 replied as follows:
"................................. Having perused all the documents supplied by you, it is decided that extension of the term lease deed between St.Anthony's Charity Institute, Jeppu and M/s. Kudupi Srinivas Shenoy & Co. cannot be extended for any further period."
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31. The above quoted paragraphs show that Trust of respondent Nos.1 & 2 unequivocally declined to extend the lease period. Learned Counsel for the appellant referring to the term "fresh lease deed" in Ex.P22 submits that what was sought under Ex.P22 was not extension of lease, but execution of fresh lease, therefore the Clause of Article 54 of the Limitation Act relating to notice of refusal to perform does not apply.
32. The Hon'ble Supreme Court in paras 29 and 30 of the judgment in Hardesh Ores (P) Ltd.'s case referred to supra held that there is difference between extension of lease in accordance with the covenant in that regard contained in the principal lease and renewal of lease, in accordance with the covenant for renewal contained in the original lease. In the case of extension of lease for the term agreed upon it shall be a necessary consequence of the clause for extension. It further held that in cases of extension, it is not necessary for fresh lease deed, whereas for execution of fresh lease deed, parties have to execute another document with fresh covenants.
33. In the present case, reading of Ex.P22 shows that though the term 'fresh' was used, it was virtually extension of the existing lease. In Ex.P23, Trust of respondent Nos.1 & 2
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NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 used the term 'extension of lease' which conveyed that it is not agreeable for execution of any fresh lease deed. Therefore Ex.P23 makes it clear that Trust of respondent Nos.1 & 2 was not agreeable to exercise its option under Clause 4 of the agreement as long back as in the year 1986 itself. Therefore, Second part of Article 54 of the Limitation Act applies i.e. the date when the plaintiff has notice that performance is refused. In such event the suit ought to have been filed within three years from the date of such refusal. The trial Court was not justified in holding that the period of limitation to file the suit starts running from the date of expiry of lease.
34. The Hon'ble Supreme Court in Shakuntala's case referred to supra has held that in suit for specific performance of agreement of sale, the period of limitation starts to run from the date of notice of the defendant refusing to perform his part of contract. Therefore we are inclined to hold that the suit for specific performance was barred by time. Reg. Mesne Profits:
35. Appellant's first objection for the trial Court granting mesne profits is that as per Order XX Rule 12 of CPC separate enquiry to assess mesne profits is mandatory and the
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NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 trial Court ought to have ordered for enquiry. Order XX Rule 12 of CPC and Order XX Rule 12(1)(ba) of CPC reads as follows:
"12. Decree for possession and mesne profits.- (1) Where a suit is for the recovery of possession of immoveable property and for rent or mesne profits, the Court may pass a decree-
........................................................................................................ (ba) for mesne profits or directing an inquiry as to such mesne profits;"
36. Reading of the above provision does not show that the said provision in any way bars the Court from passing decree of mesne profits and option for the Court is to direct enquiry regarding mesne profits. Therefore there is no merit in the contention that the Court has no jurisdiction to decide mesne profits on itself and directing the enquiry is mandatory. Then this Court has to see whether there was material before the trial Court to decide mesne profits.
37. The appellant in his deposition admitted that there are 110 rooms in the suit schedule property and they were leased out on daily basis from Rs.1,000/- to Rs.4,000/- per day. He further admitted that there were two banquet halls and a marriage hall/kalyana mantapa which was let out for Rs.75,000/- per function. Five to ten functions were held in
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NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 each month. It was contended that even average income from each room comes to Rs.2,500/- per day and on that calculation, room rents per day would come to Rs.2,75,000/- (Rs.2,500 x 110 rooms). As per the evidence of DW.1/appellant, five to ten functions were held per month. Therefore, taking average of that, if seven functions were held per month, it would fetch Rs.5,25,000/- which amounts to Rs.17,500/- per day.
38. Learned Counsel for the appellant referring to Section 2(12) of CPC submits that what was leased out was arecanut garden in open area and building and developments were made by lessee. Therefore Trust of respondent Nos.1 & 2 are not entitled to claim income derived from the building constructed by lessee. Section 2(12) of CPC relied on by learned Counsel for the appellant reads as follows:
"2 (12) " mesne profits " of property means those profits which the person in wrongful possession of such property actually received or might with ordinary diligence have received there from, together with interest on such profits, but shall not include profits due to improvements made by the person in wrongful possession;"
39. Reading of the above provision shows that mesne profits shall not include profits due to improvements made by person in wrongful possession. Possession of the appellant
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NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 becomes wrongful only after expiry of term lease i.e. in 2011. But, admittedly the property was developed and the aforesaid buildings were constructed much prior to 2011. They were not even constructed by the appellant, but they were constructed by original lessee. (After 2011 no improvements were made by the appellant). Therefore it cannot be said that, that constructions prior to 2011 were the improvements made by person in wrongful possession/appellant and their income shall not be included in mesne profits. Such interpretation of Section 2(12) of CPC is incorrect.
40. Another contention is that the trial Court was wrong in assessing mesne profits to Rs.50,000/- as respondent Nos.1 & 2 had not produced any documentary evidence to prove income of appellant from the suit schedule property. The basic principle of Indian Evidence Act, 1872 is that person who is in possession of the best evidence should produce the same. The documents to show income fetched from the said property would be in the possession of appellant. By admissions of appellant himself the initial burden of respondent Nos.1 & 2 proving the same was discharged. It was for the appellant to produce his income tax returns to show how much income he had earned from the suit schedule property over the years. But
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NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 he did not do so. Due to suppression of such material evidence, adverse inference has to be drawn against him.
41. Considering the admissions of DW.1, evidence on record and suppression of income tax returns of appellant, we find that mesne profits awarded is moderate and that needs no interference. In view of the aforesaid clear facts and circumstances no useful purpose will be served by referring to other innumerable judgments cited.
42. We do not find any merits in the appeals and cross objection. Same are liable to be dismissed. Hence, the following:
ORDER R.F.A.No.525/2018 and R.F.A.No.2328/2019 are dismissed with costs. R.F.A.Crob.No.1/2019 is dismissed.
Appellant is hereby directed to hand over vacant possession of the property within 60 days from the date of this judgment.
Sd/-
(K.S.MUDAGAL) JUDGE Sd/-
(VENKATESH NAIK T) JUDGE KSR List No.: 1 Sl No.: 38