Karnataka High Court
M/S Miraj Marketing Company Pvt Ltd vs H N Raghavendra on 2 December, 2010
Author: Subhash B.Adi
Bench: Subhash B.Adi
IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS me ZWEJAY or BECEMBER 2010i BEFORE THE HONBLE MRJUSTICE 'A REGULAR FIRST APPEAL :'N.o_7o3'o/2'oo5a. A BE"! WEEN: A Company incorporateddtdnd-er V. " the Companies Act, 1956 ' ' ' having its registered office-.. _ ' at 'ABAN HOUSE,' SW1 fiioor, _ V Rupewaik Street, ;F{an1part.1Row_.._ ' Mumbai -- 400 C323"""3.__ 'r " Also at Shop _. «A Ground I<'1oor.e§:*Jo.6?L*?s/"1 Bluernoon Cemp1e:<_»'"< M.G.Road, _ V Bangalore e560 0017A' .-- Represented by its' _ Special Power oV'fA_Vttorney holder M/s Mira} Marketing Co~rnpan3.r"?'¢r._:.'I,fd.,. 'x"P./I3'. £'1.eJayashanker\ ..... H ...APPELLANT Adv., for M /s Holla & HoI1a,Advs.) Amend jg v, Sri. H. N."R,.a§g'havendra " "_Aged=a_b0u£r 43 years Residing at No.18 ~ ---.d.'Lo\;grer Palace Orchard . Bari galore. "pMa11agiI1g" Partner of ~ ~ M/s HRB Enterprises, A 1'egist:ered Parf:.11ersI'1_i.p Firm Under the lnd:ia1'1 .Partners1o1ip Act Having its office at 3"" Floor, Bluemoon complex No.64, M.G.Road. Bangalore -~ 560 001. ...RESPONDEN'F {By Sri.Vijaya Krishna Bhat, Adv.) This R.F.A.is filed under Section 96 of the judgment and decree dt.5.4.2005 «in it O.S.No.5857/2003 on t.he file of ee xoneere.3eem; Judge, Bangalore (cca No.26), eee;1;eeegg the'..'e.suit«. fiiieeif by the respondent herein for ejieve't.1:nent"and
This appeai is covrrzing on"forr_:dietation of] udgment this day, the Court deliVered- _ This defendant against the judgmerfiand deVe'1"ee nassed in O.S.No.5857/O3 dated o5..Q4*.§.oof5 on__the rite of the 101.1%: Addl.City Civil Judge, Bange11o1"e § , ' V .
Fafiies wouid be referred as per their ranking .4 H " ' ---hhefore the' trial cou rt.
it Suit is one for ejeetmerlt directing the defendant T ..'_4"'i'o«'Vacat.e and hand over vacant. possession of the suit.
" "schedule property and for recovery of Rs.1.2.500/~ p.a. E' we:
xi"
towards daineiges for unlawful use and oc<::upai:io11 of the suit: seliedule property.
4. The ease of the plaintiff is that he is a managing partner of Enterprises and absolute 0wner.vof*"the. commercial building. Defendant was indu__et_ed' tenant in respect of a shop premises b'eari'r>_g. No.64 "
which is fully described in the property was leased L1nde_r"~.._a "agreement."dated 17.02.1993 on monthly. rent o.f--fits.-5.'0Q0/4 the same was increased to -linrjliisive of water charges':__an_.d Aeleetrieity~.e'ha1*ges. Defendant had paid Rs.l6,75,fOOl)/--V "'to'w:ard's....ll4'interest free refundable sectiyriiy deposit plaintiff. Plaintiff had agreed to refund amount to the defendant on expiry or lease. Lease period was fixed at H
-Vmont.hs."'--V.a Defendeint. continued as a statutory tenant not entitled to sublet the premises either in for in full to any third person. However, on 10.2003, a letter was sent to the plaintiff by M/s.Zodiae Mayfair I.,i1d., represented by one I8/ir.Joh11 Gorald along with two c_~.l'1eq1.1es crlated 1732.02 and Ol.Ol.2008 for an amouiit of Rs.7.600/»-- eaeh claiming to be the rents for the month of November and December, 2002. However, the plaintiff did the said amount and by letter dated upon the defendant as to how the "third it inducted and for explanation. T Mayfair Limited is situated at N'o.w18/ta c:ovfnifie'rcia1 street, Bangalore, haying registe_ied""e.officeAin Bombay and the name of the changed from M/s.l\/[iraj Mayketiiug as such the defendant"i'l1adi, "ad'i1ea"red terms of the lease deed. issued a notice dated i5.o5.t2oo3l,"= \5_fIf1i(;1§--._ received by the defendant, 'xi'"vWheifein:;1fheAyplaintiffhad terminated the tenancy and did not Vacate and handover the the suit property, he filed suit for ectment}/possession.
H5. On se_r'vi<:e of summons, defendant: appeared Vi .,t_)r_-ifore the Court through his advocate and filed written V statement. He denied that the plaintiff is the managing partner of M/s.HRli3 Enterprises. However, admitted that the defendant was inducted as a tenant under the teziaricy agreement dated 17.02.1993 on monthly rent of Rs.7,600/- inclusive of electricity charges a11d--j"wa"te1'..A' charges. It is also admitted that the irif::ye.i'est_VV"free. V' refundable security of Rs.16.75.0vGO/'»--.wa's the plaintiff. However, defendant that the lease is for a period lofi_:l"l,_y months. claim that he is entitled for renevrai lofthe tenancy from time to time not eXeeedirig_"1 a time. If the rent is paid after: the the tenancy shall atttorriatileallyii7fst.ands renewed for a period of 11 months.Vx'«.[lnder the lease agreement, the defendant was _pe1in".iitt'ed""to use the schedule premises ' lfar itself or for any lo'i"'i'tfs associates, concerns or firms in or the directors of the defendant are ld__ii'ectyor:sl',:*.y.shareholders or partners. The defendant the shareholder in the Jodiac Mayfair limited. Hence, if not amount to subletting. Oh that. ground. l'"v.pyla_i11tiff is not entitled for possession and there is no if " -~fViolat.ior1 of the terms of lease. W
6. On the basis of these pleadings, the trial court framed the following issues:--
1. Whether the notice issued by the plaintiff terminating the H _ tenancy of t.he defendant. dated '' 15.5.2003 is valid in law?
2. Whether the plaintiff that he is entitled'"'t'o«damages from defendant? ' *
3. Whether the "defendant V .
that there is 'n.o"'eause 'of aetioni.» to file the present..V_su.it?
4. What 'W 7.1'-.Qn__behfalfvof.th«e_:"p--laintiff, his GPA holder was examined a':-'»__'PW- lb and to P5 were marked in his __evide.nj:e;e. On" of the defendant. DW-I was vA.an:d'~-,Exs.Dl to D12 were marked in his evi~:lenee."V 'Tr-ia.lT;.'eourt on consideration of the evidence, held 'tliati'i.no"tiee issued by the plaintiff terminating the 'itenafn-:_:y the defendant, is Valid and is entitled for It further held that the defendant has not if that the plaintiff has no cause of action. On the basis of these findings, the trial court. decreed the suit. ea yr It is against: the said judgmerit and decree. the defendant is in this appeal.
8. Learned Counse} for the defendan_t«app.ei!ant submitted. there is no dispute that the entered into a lease agreement per! Ex.P1. It is also not in dispute 'tphezfrent was_"fiXe!i=..ati:_' Rs.7,600/-- per month and th:_€'"f}i&1i11.t1ffxhaS the security deposit of Rs. In terms e}3ause--7 of the lease agreernentftihe. right to use the premises for" e__itseif' concern or associates or vVh_ieh_ the defendant is a director or in whieh__the the defendant~eonipany are the si§}'are~ho1der's...Vor partners. In M/s.Jodiae Mayfair AV__Vlirr1'ited.._th.ewdefendant's directors are the shareholders as iA):iVV'Vt.erms of clause 7 of the lease deed. it j does iaoti" amount to sub-lease or it amounts to violation of the lease. He also relied on c1ause--13 of "hthe lease deed and submitted that though the lease is for a period of 11 months. however option is given to the defendant to renew the tease from time to time. Even if the express renewal is not made. however if the rent is received after the expiry of the term of the lease, the lease gets automaticaily renewed for a further period of 11 months. In View of cIause--I3 the not terminable, it is permanent in nature and» 1 * the plaintiff has no right to terminate' it right to recover the possession. Be that Ex.D1 is the rent recei1o't~$_i:.:Whereii1.theV_h1ainvtiff'h:as received the rent of chequed dated 28.02.2004 and this amount received after the suit was filed. The» of the rent by the p1aintiff'after tn'stitutio_n"'of the suit amounts to waiver of the te1'minatiovn_'iof4ti1e tenancy and amounts to renewaiv of lease, vexceptifieceiving the rent or enhanced rent;':c._the.A'-plaintiffhas'"no right to terminate the tenancy "n_oi3has to take the possession.
it I.n':i'su:}'3port of his Contention, he relied on i1"»~'««___Section" of the Transfer of Property Act and it that acceptance of rent by cheque dated as per Ex.I.Z)1 cleariy amounts to Waiver of the dvtermiriation notice and as such. the suit fiied by the piaintiff is not maintainable nor the defendant is liable to be ejected from the suit premises. To support his contention. he relied on the judgment reported in 2004(1) SCC 1 and submitted that in the perpetual lease is permissible in India and the Apex Cotirfoii interpretation of the terms of the lease has nature of lease and the relationship betwee.n':th.e l would prove that the lease is not :leas'e_o.r but it is a perpetual lease. In this ea,sle'~alsoe:l.velause ¥';l.3l gives right to the defendant to..._xdexercise. option to renew the lease and it does option to the plaintiff in View of clause 13 of the an option is given to the plairitiffu to i*'enew_the'=_lease at his choice, and lessor ldhavintg' not retained""the right of rewentry, sueh lease is but it amounts to perpetual lease. He also judgment of this Court reported in ll"-<.___V20O5{5)" 273 and submitted that if the rent is it alter the expiry of the lease period, it amounts i..t:o__§vaiVer of the termination notice. He further relied on " ~another jtldgrrient of the Allahabad High Court reported in AIR 1986 Allahabad 623 and submitted that if the I0 rent is accepted subsequent to the quit. notice it amounts to waiver. On these submissions. Counsel for the defendant. submitted that terrnination is bad in law and right»otfterrrii'nati:oi1is not reserved under the lease deed, the t1i;'ial--i'co"a_rt. é'Ugi1f{.,..to:1,i_' have ignored the terms of "th.r~;. lease decreed the suit. AccordIng}y:':'»he=,sou§ht.ifor'setting aside the judgment and"dec.ree_ court.
10. On the other "h_an_d.dlearnewdv.QQ1j1nse1 for the plaintiff thpedleasev a period of 11 rr1onths:'.;_ It term lease and after the expiry of«'}'1_ ,.t:fi?44defendant. has no right to COI1tiYJi:E,1C"i!"i the premises. Clause 7 of the lease. does AV__no:t*empoweriithe defendant to subwlease the premises. fie clause 11 and submitted that the
--Vrefere'nce'.to"sister concern or partner and it does not ime-an_t.hat the defendant can induct any stranger t.o the
--.i.'.-premises. Sister concern and partner means if the u'gdefendantwtenant has another eoneem of its own or of their own, the said concern is permitted to use the premises in the name of that person or the Company in "tor a period of 11 months.
H which the defendant is also director or partner. The word has to be understood in the context of clause ".7 of the terms of the lease. He further subniitted acceptance of rent. by cheque dated * admittedly after the suit is filed. Once the Ru the jural relationship between defendant as landlord and tenant o1*."le__ssorl '-ari'd"'le'asee comes to an end. Acceptancei-'of.the"-rent. not have any effect on the termination lofftljie tenancy. He further submitted Vito renewal of lease in"clals'e-- aece'ptled after the expiry of the terrrl-of lease: the lease under the lease agreement dated and not for ever and in this a.dn1ittedly,lV""t"hle rent is received after the ll'i.g;err.ninat:ion" ofrizhe tenancy. Once the tenancy is terrri-.inat_ed._l'4i:.~he question of renewal or revival of the tenancy-._d;oes not arise and submitted that the lease cannot be treated as a permanent lease, the lease deed itself stipulates the term. The lease in question is only Any lease for a period beyond one year, requires registration. Section 17 of the 32 Transfer of the Property Act: requires the lease deed for more then one year to be registered. Section 10? of T .P.Aet also requires registration. Section 113 of _ is not applicable to the facts and circttmstariees * C386.
11. In support of his cont.ent.ior:'_;'h;e on:V't'he?i.:
judgment of the Supreme reportedl'bvit1l"':._lZG06(4} KCCR 2541 and submitted ae_Ceptane_e rent subsequent to the fi1ing"4"o'i" tAr:1otVoperate as a waiver. He also relied of the Apex Court reportetiliiit,tstoostmrvisec 228 and submitted that as on the date ofV"fi_1in,'g suit. period of 11 months had also expiredand there was no renewal of the lease. A":_VI;ease_ being.:St;*h_e term lease by flux of time it got if the notice is not issued. it does not Q amount $"to.Veor1tinuing the defendant as a. lessee for it "~.:fi.1AlV't;1;I'<73tI" oeriod of 11 months and the suit. having been "ltfilegd based on the termination. cause shown in the 'Wnotiee is irrelevant, even if the lessor issued the notice of t:ern1inat.ion of tenancy without even stating the £3 reason, it amounts to terrnination which does not require any reason to be stated in the notice.
12. In the light of the above submissions learned Counsels for the parties, the point. t:hat:"ari:ses" ' this appeal is as to;
"Whether the plaintiff entitled ejeetment of defend'a_r_1't~.,.. on"~ the of termination of tenancy"? V' it I V
13. There is "to the relationship between the also not in dispatel*--.E'X.:P1 docurrient evidencing the relationship. the_ hp-lain-tiff and the defendant as a lessee." 'Lease Deed EXP} is admittedly for a. Defendant has not produced any dotrurnent ."[l:}l_.i4Al:;1O\?§;' that the lease has been extended for l'f3irther~~pleriod. The 1r}terpretat1or1 of the lease sought to by the learned Counsel for the appellant is that a perpetual lease on the ground that the option is ,"given to the lessee to seek renewal and reference is made to clause -13 of the lease deed.
5*?
Clause 13 of the lease deed reads uride1*:«~ The Tenant. shall be entitled to renew the tenancy from time to time for a period not exceeding eleven months at a time subject. to the Tenant. paying enhanced'. rent of 15% over the rent paid every.«..3'_A» years. If the Tenant continues to pay.':theg.i:
rent even after the expiry. »of.__the tenancy, the tenancy shail have been renewedyfor furthei' perivodz eleven months from t}'termonth"*for=xv'hie'hv'H the rent is paid su(_:h rertewal V K shall be on""--the and shetmforth except that 4' increased as a fo'r*esaid.V"'_ A _
14. Fst.a-ted in clause--~i3 is that if the 'l V. e5onti'n.if1edHtompay rent even after the expiry of the the tenancy shall be deemed to have i _ for further period of eleven months. if the lease is to be extended for a period than one year, under Section 17(d} of the Re:_a_{ist:ratiot1 Act, the doctimertt requires compulsory it registrat.ion and it is not in dispute that. if the document. F. AA.
,9-k 15 which is required to be registered, and not registered will not be admitted in the evidence to prove the transaction. There is also a bar under Section V1.07 of the Transfer of Property Act, assuming that f is permitted under clause--13 of Ex.P1 _ that 11 months enures to the the' if that option is exercised after the" expiry prelserit tenancy i.e., the tenancy dated 17.02.1993. It is nobo'dy's-l_lAca§sell"that"the rent was paid irnmedia-tely'~a.fte'r:;: months period and lease Vlvaslgot 1. months. The relationship between tlielpvartiesl'con.tinued even beyond 11 months, as tenarit after expiry of the lease period '\A.roii'l.:1AVgl'a.mounts to continuing the lessee Under Section 116 of the T.P.Act permits l<._the l€"S$Cil' to accept the rent even after expiry of the "'l-d_lease'A_« period, however such acceptance only prove the tenancy for month to month. If such acceptance even beyond the period of lease deed, tenancy would be only for a month and it does not extend beyond that. £6
15. As far as Contention that the termination was made on the ground that the lessee has sub~»1et___the premises, olause--7 of the lease deed provides tl'1at"Iess_e'e_ to use the premises for itself or sister co11cern,.A4'o--1" : ' or a Company in which the direetoers._of t'hevVleesee' share holder. No doubt. it premises by the sister eoncerI1:_eif.e., b.ut__the1sa1d.;'elau'se-- 7 has to be understood in erthetheontext lof~--th_e'§ lease. Holding a share in at'st1~arige'1j3Ciornpany cannot be termed as sist_erfeonee;_1*n »or..:it._Would'be termed as the lessee h.'a's"substan:iE§ial i'11.terest'._'i"n"the said company. The DireetorEs«i0'f..the-- must have substantial interest iI1d*tlf_1'eVeornvpatiy, which is sought to be Etontinlued. inthe premises. Apart from the above, it is original term (if the lease has expired 1()ng..4'bacl;t_t4he1-e is no extensiori. As such in case of it 'expiry loftlie period, no notice of termiriation is T i':e'ee_ssary, as by the flux of time the lease got
-. te.r}1ninat.ed.
E6. The receipt of amount of rent. as per Ex.Dl0, does not erea'::e any waiver to quit notice and Section 1 13 of the Transfer of Property Act has no appli4catiroi1._to t.he facts of this case. The lease being the a period of 11 months and aftCI'M€XplI'y"Of'"~i:}.i;I1:QI1th§lu,"CV quit notice has been issued and after.
said month. the suit has been file'd..forVeje'ctnientV, relationship being the under the contract, the continue for a period of 11 rrlonthsy' tresh contract entered into option given by the i.e., after the expiry of the said to continue for 11 months, but it is not the cas4e'.o'i"l.e7ssee that he was exercised that '_ opt_ioin that"theI.'ewwas any lease prior to the filing of 't.l,1e"suit__t1nder,..which the tenancy is continued. Even if thatiis t.he said period got expired by quit notice... C it "l7. The decision of the Apex Court relied upon by
-ithe learned Counsel for the defendant reported in 2004 {1} SCC 1, it is a case of interpretation of lease deed wherein the terms of the lease are very clear, on the basis of which the Apex Court has observed that in India, permanent lease also can be created. What constitutes the permanent lease is explainedV.yl_l'i~n~.._a decision of the Apex Court in Sivayogeshwara Cotton Press... .ps.__ "' M.Panchanksharappa and another re'piorted~_in SCC 413 and it is not thellciase ofthe that * in such a lease has beenyentered---intohor the lltennoslof lease are identical. The reading' of not show that the parties intendyed;'to_ lease.
Hence, it is lease for fixed pe'r1'_o'd. of perpetual lease are absent in E2;:.Pl; " By lnovstretch of imagination, the lease termed permanent lease. Admittedly, the is only for a period of 11 months and not"'~eve__n one year, continuing thereafter would be only it Inonthlto month and not beyond.
19. In these circumstances when the term of the lease has expired, and it is terminated, the lessee has no right to continue in possession. The trial court on proper consideration of the evidence on record has decreed the suit. I find no ground to interfere with the judgment and decree of the trial court.
20. Accordingly, I pass the f0Il0w1'ng:-
Appeal fails and the same bear their own costs. ' Judge