Kerala High Court
The New India Assurance Company Limited vs Vinod G.Pillai on 14 December, 2010
Author: Pius C.Kuriakose
Bench: Pius C.Kuriakose, N.K.Balakrishnan
IN THE HIGH COURT OF KERALA AT ERNAKULAM
RCRev..No. 255 of 2010()
1. THE NEW INDIA ASSURANCE COMPANY LIMITED,
... Petitioner
2. THE NEW INDIA ASSURANCE COMPANY LIMITED,
Vs
1. VINOD G.PILLAI,ALIAS G.VINOD KUMAR
... Respondent
For Petitioner :SRI.MATHEWS JACOB (SR.)
For Respondent :SRI.MILLU DANDAPANI
The Hon'ble MR. Justice PIUS C.KURIAKOSE
The Hon'ble MR. Justice N.K.BALAKRISHNAN
Dated :14/12/2010
O R D E R
PIUS C. KURIAKOSE & N. K. BALAKRISHNAN, JJ.
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RCR. No. 255 of 2010
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Dated this the 14th day of December, 2010
O R D E R
Pius C.Kuriakose, J.
Under challenge in this revision filed under Section 20 by the tenant, The New India Assurance Company Ltd. is the judgment of the Rent Control Appellate Authority, Thiruvananthapuram reversing a negative order passed by the Rent Control Court dismissing the application on the view that the need projected by the landlord is not bona fide. The need projected by the landlord in the RCP was that the building is needed bona fide for occupation by his father Dr. T.D. Gopalakrishna Pillai for the purpose of conducting a clinic. The bona fides of the above need was stiffly disputed by the tenant, who also contended that the RCP is not maintainable. The Rent Control Court enquired into the RCP and the evidence consisted of Exts.A1 to A5, B1 to B8 and oral evidence consisted of PWs. 1 and 2 and CPW-1. PW-1 RCR. 255/10 -2- was the landlord and PW-2 was Dr. Gopalakrishna Pillai. CPW-1 was an officer of the tenant company. The Rent Control Court did notice that Ext.B7 lease deed contained a clause for renewal of lease at the option of the tenant for a period of five years from 12-6-2007 when the initial period of five years expires and that the RCP was instituted ignoring the option exercised by the tenant to have a renewal. Nevertheless, the Rent Control Court did not reject the RCP as not maintainable in view of sub-section (9) of Section 11. Instead, on evaluating the evidence it was held by the Rent Control Court that the need projected is not a bona fide one and that the RCP was instituted only because the tenant did not oblige to the landlord's request for enhancing the rent to the rates demanded in Exts. B2 and B4. In that view of the matter, the RCP was dismissed on merits by the Rent Control Court.
2. The learned Rent Control Appellate Authority considered the appeal preferred by the landlord and reappraised the pleadings and the evidence. The learned RCR. 255/10 -3- Appellate Authority considered the question of the maintainability under Section 11(9) of the present RCP very seriously. Interpreting the various clauses in Ext.B7 lease deed, the learned Appellate Authority would conclude that a cumulative reading of the various clauses, especially clause 4(ii) and 4(iii) can lead only to the conclusion that the option given to the tenant under clause 4(ii) need be given only if the landlord also consents. In that view of the matter the Rent Control Appellate Authority held that the RCP was perfectly maintainable. Coming to the merits of the matter the learned Appellate Authority would take the view relying on the judgment of this Court in Kuryan v. Usha Cheriyan, 2008 (1) KLT 739 and also the judgment of the Supreme Court in Sait Nagee Purushothaman and Company Ltd. v. Vimala Bai Prabhulal, 2005(4) KLT 452 (SC) and another judgment of this Court in Dr.P.Venugopalan Nair v. S.Mohammed Kunji and others, 2010 (1) KLR 2881 that the defence put up by the tenant challenging the bona fides of the need projected was not RCR. 255/10 -4- sustainable. Accordingly, the Appellate Authority would hold that the need was bona fide and would accordingly order eviction for obvious reason the tenant not claimed the protection of second proviso to Section 11(3).
3. In this revision under section 20 various grounds are raised assailing the judgment of the Appellate Authority. We have heard the submissions of Sri. Mathews Jacob, learned Senior Counsel for the revision petitioner and those of the learned counsel for the respondent. Sri.Mathews Jacob, learned senior counsel for the revision petitioner would, at the very outset, draw our attention to sub-section (9) of Section 11 and to various clauses in Ext.B7 lease deed. The learned senior counsel submitted that the interpretation which the learned Appellate Authority has placed on the various clauses 4(ii) and 4(iii) of Ext.P7 is clearly erroneous. The RCP is barred by virtue of Section 11 (9), so submitted the senior counsel. Drawing our attention to B1, B2, B3 and B4, the learned senior counsel submitted that it was transparently clear that the RCP was instituted RCR. 255/10 -5- only because the tenant did not oblige to the request of the landlord to enhance the rent at rates higher than the rate of 25% agreed upon under Ext.B7.
4. The learned counsel for the respondent would support the judgment of the learned Appellate Authority on the various reasons stated therein. According to him, it is a correct interpretation of the various clauses in Ext.B7 that has been given by the learned Appellate Authority and in this jurisdiction under Section 20, this Court is not expected to take a different view as it cannot be said that the interpretation given by the learned District Judge is grossly erroneous. The learned counsel for the respondent would support the eviction order passed by the learned Appellate Authority submitting that it is the right of every landlord to demand and obtain reasonable rent for the building which belongs to him. Demand for higher rent at a previous point of time cannot be a reason to hold that the need for own occupation projected in the RCP is not bona fide.
5. We have anxiously considered the rival submissions RCR. 255/10 -6- addressed at the Bar. Section 11(9) of Act 2 of 1965 reads as follows:
"11(9) Where the tenancy is for a specified period agreed upon between the landlord and the tenant, the landlord shall not be entitled to apply to the Rent Control Court before the expiry of such period."
A reading of the above provision will show that rejection of a rent control petition instituted before the expiry of the period of lease agreed upon by the landlord and the tenant is inevitable. In other words, it is a statutory bar which has been created for rent control petitions instituted before the expiry of the agreed period. When there is a statutory bar, rejection of a proceeding instituted overlooking the bar is implicit. The question to be considered now is whether there is an agreement between the lessor and the lessee to allow continuation of the lease for a period of five more years from 12-6-2007 when admittedly the original period of five years has expired. Ext.B7 is a registered document. Hence neither Section 17(1)(d) nor Section 49 of the Registration Act will stand in the way of Ext.B7 being relied RCR. 255/10 -7- on by the court as a document evidencing creation of a lease providing for period longer than one year. In the opening paragraph (1) of Ext.B7 itself it is provided that the lessee will be entitled to hold the leasehold for a period of five years from 12-6-2007 with an option for renewal for another five years by registered lease subject to liability to pay 25% increase in rent. The other clauses to Ext.B7 which are relevant are clauses 4(ii), (iii) and (iv) which we quote as follows:
(ii) If the lessee shall be desirous of renewing the term hereby created on the expiration thereof and on its such desire shall give to the lessor atleast two months notice in writing in that behalf before the expiration of the term hereby created then the lessor shall at the cost of the lessee and the lessor in equal share grant to the lessee the lease of the demised premises for a further term at such rent as denoted in para 4 above and subject to the same covenants, conditions and agreements in all respects as are herein reserved and contained.
(iii) That the lessor and lessee may mutually agree to terminate this lease on giving three months notice therefor to the other party.
(iv) That in case this lease deed is determined prior to the expiry date either at the option of the lessor or lessee or otherwise, the lessee shall have the right RCR. 255/10 -8- to demand and collect from the lessor the aforesaid deposit amount of Rs.57,942/- or any part thereof from the lessor and the lessor will immediately pay the amount demanded by the lessee.
Significantly under clause 4(ii) a very clear option is given to the lessee to have the lease extended by another five years upon the lessees expressing their desire to have such option by giving two months notice in writing before expiration of the original period of five years subject to conditions elsewhere stipulated in the agreement regarding rent. Under clause 4(iii) what is provided for is only termination of the lease on mutual agreement.
6. Clause 4(iv) comes into operation only in situations where lease deed is determined prior to the expiry date. It is clause 4(ii) which is applicable in the present case. The learned Appellate Authority has taken the view that on a cumulative reading of the clauses 4(i) to 4(iv) it will be seen that the renewal clause in the lease deed is only an optional one which would "come into force only on the consent of the lessor" Interpreting the lease deed, the learned Appellate RCR. 255/10 -9- Authority opines that there is no provision in the lease deed to the effect that once the lessee exercises his option for renewal the lease would be automatically renewed or extended. According to the learned Appellate Authority, there is no concluded contract for renewal of the lease and the provision in clause 1 of the lease deed that the renewal shall be by means of a registered lease deed shows that there has to be consent from the lessor also for the renewal term to operate. Relying on the various items of correspondence between the parties with regard to the renewal, the learned Appellate Authority concludes that the landlord did not become inclined to renew the lease on the terms suggested by the lessee and hence the option exercised by the lessee has not been materialized. According to the learned Appellate Authority, the tenant will have to approach a competent civil court for enforcement of the renewal clause in the lease deed and in the absence of orders in that regard from a civil court the lessee does not have any crystallized right to continue the tenancy for a RCR. 255/10 -10- further period of five years. In that view of the matter, the learned Appellate Authority would hold that the rent control petition is not premature and is maintainable.
7. We are unable to endorse the reasoning of the learned Appellate Authority. According to us, clause 4(ii) of Ext.B7 lease deed confers upon the lessee an unqualified right to have lease of the building for a further term of five years and the only requirement is that the lessee shall give two months notice in writing expressing his desire to the lessor. In the instant case, it is not disputed that the lessor was informed as required by clause 4(ii), of the lessee's desire of having a renewal. Interestingly, the lessor himself was agreeable for such renewal. The condition insisted upon by the lessor was that rent as demanded by the lessor should be paid. Lessee however, was prepared to pay only 25% increase in rent which is the increase contemplated by Ext.B7 lease deed, in the event of exercise of option for renewal. True, clause 2 of Ext.B7 lease deed indicates that renewal has to be implemented through another registered RCR. 255/10 -11- lease deed. But to say that the said clause means that the option given to the lessee under clause 4(ii) for renewal will operate only if the lessor also agrees will be rendering clause 4(ii) which is one of the enumerated terms of the contract between the parties, unlike clause 1, otiose. We are convinced that this is a case where the lessee has validly exercised his option for renewal and the period agreed between the parties to the lease granted under Ext.B7 had not expired when the rent control petition was instituted, and that sub-section (9) of section 11 bars the rent control petition.
8. Coming to the findings entered by the learned Appellate Authority on the merits of the ground under sub- section (3) of Section 11, we are of the view that those findings are founded on evidence and being reasonable findings, are not liable to be interfered with in revisional jurisdiction. According to us, it is on a correct appreciation of the evidence and keeping in mind relevant statutory provisions as well as precedent law, that the learned RCR. 255/10 -12- Appellate Authority concluded that the need is bona fide. Once such a conclusion is arrived at, eviction order is inevitable as the revision petitioner tenant being a company is not entitled for the protection of the second proviso to sub-section (3) of Section 11. We are however, obliged to set aside the eviction order passed by the Rent Control Appellate Authority in view of our finding that the rent control petition is barred by virtue of Section 11(9). We set aside the eviction order and dismiss the RCP declining eviction holding that the RCP is premature.
9. As already indicated had it not been for the unwillingness on the part of the revision petitioner company to pay rent at the rates demanded by the landlord, the revision petitioner would have been allowed by the landlord to hold the building for five more years. In this context, we feel that the rent which is being paid by the revision petitioner is below the rent the building may fetch if the same is let out today. We are therefore inclined to re-fix the rent payable by the revision petitioner for the building with RCR. 255/10 -13- effect from 12-6-2007 at Rs.12 per sq. ft. for the total area covered by lease included in the lease hold. Accordingly, we re-fix the rent payable by the revision petitioner with effect from 12-6-2007 at Rs.12 per sq. ft. This re-fixation is subject to the right of either party to move the Rent Control Court for regular fixation of fair rent under section 5. Till fair rent is fixed, the revision petitioner shall pay rent at the rate of Rs.12 per sq. ft.
The result of the above discussion is that the RCR is allowed. The eviction order passed by the Rent Control Appellate Authority is vacated. The rent payable by the revision petitioner tenant is re-fixed with effect from 12-6- 2007 at Rs.12/- per sq. ft. The parties are directed to suffer their respective costs.
(PIUS C.KURIAKOSE, JUDGE) (N.K.BALAKRISHNAN, JUDGE) ksv/-