Karnataka High Court
M/S Kothari Inter Group Ltd vs M/S Vinayaka Enterprises on 28 January, 2013
Author: Jawad Rahim
Bench: Jawad Rahim
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®
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 28TH DAY OF JANUARY 2013
BEFORE
THE HON'BLE Dr.JUSTICE JAWAD RAHIM
R.F.A. NO. 1904/2012
BETWEEN:
M/S KOTHARI INTER GROUP LTD.,
NO.1/1, "VINAYAKA TOWERS",
2ND FLOOR, FIRST CROSS ROAD,
GANDHINAGAR,
BANGALORE - 560 009
REP. BY ITS MANAGING DIRECTOR
SRI BABULAL KOTHARI,
S/O PUKHRAJ JI,
AGED ABOUT 64 YEARS
... APPELLANT
(BY SRI SUNIL S.RAO, ADV., FOR SRI S.R.RAVIPRAKASH,
ADV.,)
AND:
M/S VINAYAKA ENTERPRISES,
"VINAYAKA TOWERS",
NO.1/1, FIRST CROSS ROAD,
GANDHINAGAR, BANGALORE - 560 009
REP. BY ITS MANAGING PARTNERS
SRI C.R.JANARDHANA,
AGED ABOUT 60 YEARS,
S/O LATE C.K.RAMAIAH SETTY,
SRI S.A.ASWATHANARAYANA SETTY,
AGED ABOUT 73 YEARS,
S/O LATE S.S.ANANTHRAMAIAH SETTY
2
... RESPONDENT
(BY SRI M.S.RAGHAVENDRA PRASAD, ADV.,)
THIS RFA FILED UNDER ORDER 41 RULE 1 R/W
SEC.96 OF CPC., AGAINST THE JUDGMETN AND DECREE
DATED 13.08.2012 PASSED IN O.S.NO.1879/2009 ON THE
FILE OF THE XII ADDL. CITY CIVIL & SESSIONS JUDGE,
BANGALORE, DECREEING THE SUIT FOR EJECTMENT,
ARREARS OF RENT, DAMAGES.
THIS APPEAL COMING ON FOR FINAL HEARING THIS
DAY, THE COURT DELIVERED THE FOLLOWING
JUDGMENT
This is a defendant's appeal against the order of eviction in O.S. No.1879/2009, on the file of City Civil Judge, Bangalore.
2. Heard Sri. Sunil S. Rao, learned counsel for the appellant and learned counsel Sri. Rajendra Prasad for the respondent/plaintiff. Perused the records in supplementation thereto.
3. From what the learned counsel on both sides have adverted to and also manifest from the records, the factual matrix is:
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a) The respondent filed a suit against appellant seeking judgment and decree to eject him and also for a judgment and decree in a sum of Rs.1,44,000/- to be recovered from him with interest at 21 % per annum being the arrears of rent and also for damages of Rs.50 per sq.ft per calendar month on 1700 sq.ft from 29.1.2009.
b) In support of it, it averred, it is a partnership firm represented by Managing Partner- C.R.Janardhan and S.A. Aswathanarayana Setty, who owned Vinayaka Tower, situated at No.1/1, First Cross, Gandhinagar, Bangalore, which is a multistoried commercial complex. The appellant is one of the tenants, who occupied second floor on monthly rent exclusive of water charges, electricity charges, lift and other maintenance charges.
c) It is alleged, the appellant is a chronic defaulter in payment of rent and also other charges towards water and electricity charges. The plaintiff also averred for the past 12 years he has committed defaults in payment of rent and other arrears causing harassment and loss to it. The 4 plaintiff also alleged that he has sublet the premises to the following:
1) Rockwell Housing Ltd., 2) Barclays Credit Ltd., 3) Isotex Taray Polyester Ltd. 4) Kothari business housing Ltd 5) Kothari Inter Gold 6) Paxal Chemical 7) Metro Diamond Export Ltd.
and has derived monetary benefit from them, thereby making illegal gain which is to plaintiff's detriment. They also alleged that during 24.5.2009, plaintiff terminated tenancy as the appellant failed to pay the rent and to evict him from the premises which notice has been duly served.
Since he failed to comply with the demand made therein, they initiated HRC proceedings in HRC No.1982/90 in the Court of Small Causes, Bangalore, which petition was decreed as he committed default in payment of rent. The order passed under Section 29 of the Karnataka Rent Act, 1999 attained finality, in view of its confirmation by this 5 Court in HRRP 431/1997 dated 1.4.1997. The plaintiff also referred to the fact that judgment and decree in HRC 1982/90 was put in execution in Execution Petition No.1985/1998, but executing Court dismissed it as not enforceable in view of the amendment of provisions of Section 31 of the said Act. Consequent to change in the position of law, plaintiff was forced to initiate fresh action and in this regard terminated his tenancy by a statutory notice under Section 106 of the Transfer of Property Act on 22.12.2008. Since he failed to comply with the demand in the notice, it initiated proceeding in O.S. No. 1879/2009.
d) In response to the suit summons, appellant entered contest and filed written statement admitting his tenancy under plaintiff, but described the plaintiff as a nodal rent collecting agency between the owner and defendant. It is further alleged that actually the defendant was inducted by one Venkatasubbaiah Shetty, who had instructed him to pay rent to plaintiff and that he followed these instructions. He denied the jural relationship of tenant and landlord between 6 plaintiff and himself and based such defence on the plea that there was no documentation of lease.
e) Alternatively, he took up defence that the suit was bad for non-joinder of necessary parties viz., Venkatasubbaiah Shetty, his alleged landlord. He further contended that the suit was barred by the provisions of Indian Partnership Act, as the firm is unregistered.
f) Next contention was that the rent payable by him was only Rs.7800/- p.m. in respect of the land measuring 1700 sq.ft. He further contended Venkatasubba Shetty had leased out to him an area of 1650 sq. ft on monthly rent of Rs.7850/- inclusive of water charges, electricity charges, lift and other maintenance. He further alleged that a sum of Rs.3,00,000/- was paid as goodwill and Rs.1,00,000/- was paid as advance which is retained by Venkatasubbaiah Shetty.
g) Lastly and finally, he described the notice issued is not in terms of Section 106 of the Transfer of Property Act. 7
h) Based on the material propositions in the pleadings of the parties, the learned Trial Judge has framed following issues:-
1. Whether the plaintiff proves the jural relationship of landlord and tenant?
2.Whether the defendant proves that the plaintiffs are only the rent collectors?
3. Whether the notice of termination is valid?
4. What order or decree?
Additional Issue framed on 28.10.2010:
Whether the plaintiff proves that it is a registered partnership firm represented by Mr.C.R.Janardhana and Mr.S.A.Aswathanarayana Setty Managing Directors?
i) In the trial that ensued the plaintiff-C.R. Janardhan tendered evidence as P.W.1 and relied on 6 documents, while the defendant tendered his evidence as D.W.1 and relied on 16 documents. One T.S. Venkatasubbaiah was examined as C.W.1.
4. The learned Trial Court analyzing the evidence held plaintiff's evidence outweighs the defence and by the 8 impugned judgment and decree, decreed the suit. Assailing it he is in appeal.
5. Among several other grounds, the contentions of the learned counsel for the appellant urged in this appeal are as under:
i) The appellant no doubt was inducted into the premises as tenant but such tenancy was created only by Venkata Subbaiah Shetty and not by plaintiff.
ii) As the plaintiff had initiated HRC proceedings against the appellant on the basis of eviction notice dated 24.4.1989, the tenancy was terminated thereby and same was confirmed by an order of eviction passed by the Trial Court, which was confirmed by this Court in HRRP No.431/97 on 1.4.1997. Thus from 1.4.1997 the appellant is not tenant in law under the plaintiff. He is unauthorized occupant and thus to seek his eviction, suit for possession had to be filed and not for ejectment based on termination of tenancy under the provisions of Transfer of Property Act. 9
iii) Lastly, it was submitted that the jural relationship of landlord and tenant between the plaintiff and appellant should have been first decided by the Trial Court, in view of the specific defence that Venkatasubbaiah was the landlord and the plaintiff was only a nodal agency for collecting rent to be treated as a landlord.
6. Learned counsel would seek citational support to his contentions relying on the following decisions:
1. SAJITH CHOPRA -VS- SADHU RAM AND OTHERS (AIR 2000 SUPREME COURT 212)
2. SURESH BABU -VS- SMT. S.SUSHEELA THIMMEGOWDA reported in ILR 1998 KAR 3885 AIR 2002 SUPREME COURT 3284 (M/S Subbarao and Sons -VS- YASHODHAMMA)
7. In negation of these grounds, Sri. Rajendra Prasad, learned counsel for the respondent would submit that the jural relationship between the plaintiff and defendant was never an issue raised for consideration before the Trial Court at any time. He would submit the appellant had in unequivocal terms admitted the tenancy in HRC.No. 10 1892/90 and suffered an order of eviction. The same was affirmed by this Court in HRRP. No.431/1997 and hence he cannot now canvass it as a defence which has been negated.
8. He would submit that the order of eviction in HRC proceeding bears testimony to the fact that issue like relationship of landlord and tenant, rate of rent was gone into and decided finally. He would submit the plaintiff was entitled to the benefit of the order of eviction but for the declaration that Section 31 of the Act is unconstitutional. He would further submit, because of such declaration, decrees obtained by the landlord under the provisions of the Rent Act had become inexecutable, necessitating filing of souit in terms of the judgment in the case of SURESH BABU .vs. SMT.SUSHEELA THIMMEGOWDA (ILR 1998 KAR 3885 [supra]). Thus the defendant-landlord could not raise any objection in the suit for ejectment or in execution of the order of eviction passed in his favour.
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9. Keeping in mind what is urged by both sides, I have perused the records in supplementation thereto.
10. The first ground urged by the appellant's counsel is, there was no subsistence of relationship of landlord and tenant between the appellant and the respondent. This issue shall not hold us long as the records made available bear testimony to the fact that the plaintiff in the suit had initiated eviction proceedings against the appellant herein in HRC.1982/90 before the Court of Small Causes, Bangalore, in which he had also made an application under Section 29 of the Karnataka Rent Control Act, 1961. The issue regarding existence of jural relationship of landlord and tenant between the parties was gone into and decided on merit. The appellant herein who was respondent in eviction proceedings had questioned the order of eviction passed against it in HRRP.431/97 before this court which was also heard and disposed of on merit on 1.4.1997, confirming the order of eviction, thereby affirming the finding of the trial court about the existence of jural relationship of landlord and tenant between the parties. In fact plaintiff had filed 12 Execution No.1985/98 to enforce the decree of eviction, but he could not succeed as by then, the provisions of Section 31 of the Karnataka Rent Control Act, 1961, was not in the statute book. Consequent to such change in law, plaintiff could not execute the order of eviction obtained validly, necessitating filing of suit in o.S.1879/09.
11. I am satisfied that the appellant herein had not left any opportunity unutilized to dispute jural relationship of landlord and tenant right from the year 1990 and had failed to substantiate such defence. The order of eviction in HRC.1982/90 is based on existence of jural relationship of landlord and tenant which has reached finality by virtue of the order passed by this court in HRRP.431/97.
12. Despite such defeat to its defence, appellant once again raised it in O.S.1879/09 through its written statement, necessitating adjudication by the trial court. In the trial that ensued, the learned judge in O.S.1879/09 has received evidence, ocular and documentary, besides certified copies of the judgment relating to the order of 13 eviction in HRC.1982/90 as also the order passed by this court in HRRP.431/97.
13. The finding of the trial court about existence of jural relationship of landlord and tenant between the parties is based on such material evidence. I am satisfied that the ground urged in this appeal against such finding is not only meritless, but undoubtedly, is an attempt to impede the process of eviction initiated by the landlord.
14. The next question raised by the appellant as alternate defence is, such relationship of landlord and tenant, even if it is held proved, ceased to exist from the date of judgment in HRC.1982/90. In other words, learned counsel for the appellant would contend that the order of eviction passed against the appellant terminates and extinguishes the relationship of landlord and tenant in view of the definition of 'tenant' engrafted in the provisions of the repealed enactment, i.e. Karnataka Rent Control Act, 1961, as also the Karnataka Rent Act,1999. He has drawn my attention to the definition of the expression 'tenant' 14 appearing in both the enactments. They are extracted hereunder:
'tenant' as defined under Karnataka Rent Control Act, 1961:
'tenant' means any person by whom or on whose account rent is payable for a premises and includes the surviving spouse or any son or daughter or father or mother of a deceased tenant who had been living with the tenant in the premises a sa member of the tenant's family upto the death of the tenant and a person continuing in possession after the termination of the tenancy in his favour, but dos not include a person placed in occupation of a premises by its tenant or a person to whom the collection of rents or fees in a public market, cart-stand or slaughter house or of rents for shops has been framed out or leased by a local authority.' 'tenant' as defined under Karnataka Rent Act, 1999:
'tenant' means any person by whom or on whose account or behalf the rent of any premises is or but for a special contract would be, payable and includes:
(i) a sub-tenant;
(ii) any person continuing in possession after the termination of his tenancy, but does not include any person to whom a licence as defined in Section 52 of the Indian Easements Act, 1882, has been granted.' Despite clarity in the definition of tenant in the provisions of Section 3 (n) of the Karnataka Rent Act 1999, that any person continuing in possession after the termination of his tenancy, is deemed to be tenant. He submits, once order of 15 eviction is passed, the person against whom such order of eviction is passed ceases to be the tenant and therefore to evict him the owner of the premises will have to file a suit for possession and the suit for ejectment is not maintainable. In other words what he contends is, tenancy was terminated by virtue of the order of eviction in HRC.
Proceedings and therefore the suit of the respondent- landlord seeking for ejectment on the basis of notice of termination under Section 106 of the Transfer of Property Act was not maintainable. He tries to classify his client, i.e. appellant herein as an 'unauthorized occupant/trespasser.' He submits, after the order of eviction appellant lost the character of 'tenant' and became an 'unauthorized occupant.' Since it had continued to be in possession, its possession is adverse to the interest of the landlord and therefore the landlord/owner could get it evicted only by filing a suit for possession and not a suit for ejectment simplicitor. This ground is seemingly impressive but is worth rejection because tenancy is governed basically under 16 the provisions of the Transfer of Property Act which defines lease as follows:
Section 105. Lease defined -
A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
The terms 'lessor' and 'lessee' are also defined under the Act. Transferor is the 'lessor' and transferee is the 'lessee.' the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.
15. This, therefore, clarifies that when a person is inducted into the premises in consideration of the price to be paid or promised, that is monthly rent, and the owner of the premises transfers right upon such person to enjoy such property for a specific time by express or implied means. Such transferor is called 'lessor' and the person in whose favour transfer of such right is made is called the 'lessee.' This creates jural relationship of lessor and lessee which under other special statutes like rent laws is termed as 17 'tenant and tenancy.' Therefore, the rights and liabilities of the lessor and lessee have to be determined only under Section 105 of the Transfer of Property Act. Such relationship in law between two individuals or juristic person in respect of immovable property is defined under Section 105 as tenancy (lease). Termination of such relationship is permissible only as envisaged under Section 106 of the Transfer of Property Act which is a common law.
16. Thus a person having been inducted as tenant would continue to be tenant and as envisaged under Section 116 of the Evidence Act, is estopped from contending otherwise. Section 116 of the Evidence Act envisages 'No tenant of immovable property, or person claiming through such tenant shall during the continuance of the tenancy be permitted to deny that the landlord of such tenant had, at the beginning of the tenancy, a title to such immovable property; and no person who came upon any immovable property by the licence of the person in possession thereof, shall be permitted to deny that such person had a title to such possession at the time when such licence was given.' 18 This provision is intended to discourage unscrupulous individuals who, having occupied the premises by virtue of tenancy, try to set up title adverse to the owner who has inducted him as tenant. Of course Section contains the expression 'during the continuance of tenancy.' This would mean tenancy continues till determination as required under Section 106,T.P. Act and therefore the occupant becomes 'tenant holding over' and cannot, by virtue of Section 116 of the Evidence Act, set up title adverse to the landlord, like the one in this case.
17. Thus it could be held that the rights and liabilities of tenant and landlord will be determined only based on the initial transaction of lease between them. However, the rights and liabilities of lessor and lessee defined under the Transfer of Property Act is now made subject to certain social legislations like Rent Control Act. Rent Act is enacted to grant protection to tenants against arbitrary action from landlords and to protect them from unjustified orders of eviction. In furtherance of the object to prevent illegal and unjustified eviction of tenants, certain protections are 19 provided by the Rent Act as could be seen from Section 21(1) of the Karnataka Rent Control Act, 1961, (since repealed) and the subsequent enactment, i.e. Section 27 of the Karnataka Rent Act,1999. In both the legislations we see a non-obstante clause is incorporated in the relevant provisions, preventing decrees of eviction except on the grounds enumerated in those provisions. These provisions are in addition and supplemental to the right of lessees granted under the Transfer of Property Act, but the jural relationship between the parties will always be decidable based on the transaction under which the person in occupation was inducted. Hence there is no gainsaying that if an order of eviction is passed under the provisions of the special enactment like Rent Act, relationship of landlord and tenant ceases and thereafter the owner has to again file a suit for possession for evicting the occupant, as canvassed by the appellant in this case.
18. The only difference is action for eviction under the Transfer of Property Act is based on termination of tenancy, whereas action for eviction under the provisions of the Rent 20 Act would be under the provisions contained in that Act which takes care and protects the right of tenants against eviction except as provided under the special statute. Therefore, there is no gainsaying that once an order of eviction is passed under the Rent Act like the one in this case, there is severance of relationship of landlord and tenant and that the landlord has to seek eviction of the occupant/tenant only by filing a suit for ejectment. The definition of 'tenant' in Section 3(n) of the Karnataka Rent Act 1999 leaves no scope for such contention as tenant means and includes (ii) any person continuing in possession after the termination of his tenancy.
19. The third ground urged is against maintainability of suit for ejectment. This issue has been considered and decided by this court in the case of SURESH BABU .vs. SMT.SUSHEELA THIMMEGOWDA (ILR 1998 KAR 3885 [supra]). The order of eviction obtained by the landlord in HRC.1982/90 was lawfully passed and the decree could have been executed against the appellant herein, but unfortunately for the respondent-plaintiff eviction 21 proceedings were terminated based on certain case laws of this court. That doubt is now clarified by the decision in SURESH BABU's case. The cut-off date has been specified as 1.11.1996. If the order of eviction was passed before 1.11.1996, the date on which SHOBHA SURENDER's case was rendered, such matters could not be re-opened.
20. In the instant case, the order of eviction is passed against the tenant subsequent to the decision in SHOBHA SURENDER's case. Therefore, though validly passed by the court having competent jurisdiction, it could not be executed against the appellant consequent to which the landlord initiated action under the provisions of the Transfer of Property Act.
21. The respondent-landlord has issued notice under Section 106, Transfer of Property Act and terminated the tenancy. This was valid action, but the decree obtained had become a nullity as Section 31 of the Rent Control Act, 1961, was declared as violative of Article 14 of the Constitution of India. The decision referred to above makes 22 it clear that in cases filed similar to the case at hand where order of eviction was passed after 1.11.1996, the remedy to the landlord was only to file a suit for ejectment after termination of tenancy in accordance with law. The plaintiff has done that in this case.
22. At this juncture, I must also notice that the appellant has acknowledged legal notice terminating its tenancy and has also sent a reply. In the reply, there is clear admission in unequivocal terms that the appellant is tenant under the respondent-plaintiff as also rate of rent and extent of the property. Therefore, in categoric terms, appellant had admitted in the reply to the statutory notice of eviction that it was tenant under the respondent and it could only resist eviction by questioning termination of tenancy. There is no ground urged that the notice issued under Section 106, T.P. Act suffers from any infirmity or does not conform to the ingredients of the provision. Had the appellant taken a defence in its reply that it was not the tenant, or had it disputed existence or subsistence of relationship of landlord and tenant, then probably 23 respondent-plaintiff would have sought in his suit declaratory relief to declare his status. Since in the reply notice such defence was not taken, the landlord has filed suit for ejectment.
23. In this view, I am satisfied that the defence urged by the appellant before the trial court to resist order of eviction and maintainability of the suit was unacceptable in law and rightly the same has been rejected by the trial court.
24. The trial court has further directed the appellant to pay damages after quantifying the rent payable up to 12.3.2009. The trial court has also directed the appellant to pay damages sat Rs.20,000/- p.m. which order is again questioned.
25. It is not in dispute that rate of rent was Rs.7,800/- p.m. from the date of commencement of tenancy in the year 1984. The trial court has taken that as the datum to fix reasonable amount to be paid by the tenant as damages. The suit was filed in the year 2009 and therefore considering 24 the money value in that year, the learned judge has fixed damages to be paid at Rs.20,000/-. Appellant's counsel described it as high and irrational which contention must necessarily fail, as the tenant has been squatting over the property urging all frivolous defences for more than two decades, and on its own volition, appellant contended it is not a tenant and therefore after the order of eviction it will be 'tenant holding over' and will be liable to pay damages and not rent.
26. The learned trial judge has directed the appellant to pay damages of Rs.1,87,200/- being arrears of rent with interest thereon which, I find, is just and proper. In the result, I pass the following order:
I) The judgment and decree in O.S.1879/09 is hereby confirmed.
II) The direction of the trial court directing the appellant to pay Rs.1,87,200/- being arrears of rent with interest is also confirmed. III) The decree passed by the trial court directing the appellant to pay damages at Rs.20,000/- 25
p.m. from the date of suit till possession is also confirmed. However, it is made clear that the said amount will include Rs.7,800/- to be paid as rent.
IV) Parties are directed to exchange statement regarding payment of rents, if any, after passing of the judgment till now to avoid any controversy. This shall be done within two weeks.
27. At this juncture, I am persuaded to accept the request of the learned counsel for the appellant to grant reasonable time to the appellant to vacate the premises. Respondent's counsel, however, has opposed any indulgence and has alleged that the appellant has sublet the premises and is not actually in physical possession and enjoyment.
28. Keeping in mind what is urged by both sides and the circumstances in which the appellant is placed, the 26 appellant is granted extension of time to vacate the premises till 28.7.2013.
29. The appellant shall vacate the premises on or before 28.7.2013 and deliver vacant possession of the premises in question to the respondent-landlord without creating third-party interest or inducting any person. Extension of time is, however, granted subject to payment of arrears of rent within one month and also subject to filing of affidavit in the registry within three weeks from today, undertaking to comply with the conditions imposed by this order. In the circumstances, the appeal is dismissed with no order as to costs.
SD/-
JUDGE Msu/vgh*