1 R IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF APRIL 2019 BEFORE THE HON’BLE MR. JUSTICE SREENIVAS HARISH KUMAR REGULAR FIRST APPEAL No.1993 OF 2018 BETWEEN 1. K.S.Mani S/o. Late Krishnaswamy Mudliar R/o. No.7, SSI Area, 1st Cross, Rajajinagar, Bengaluru-560010.
Rep by SPA Holder Charan K.S.
S/o. K.S.Mani, Aged about 37 years, R/at No.680, 10th C Main, 6th Block, Rajajinagar, Bengaluru-560010.
R.Lokanath, S/o. D.Ramakrishnappa, Since deceased by LRs, R/o. No.7, SSI Area, 1st Cross, Rajajinagar, Bengaluru-560010.
2. Smt. Sowbhagya, W/o. Late R.Lokanath Aged about 68 years, Rep by SPA holder Kiran Kumar, S/o. Late Lokanath Aged 39 years 3. Kiran Kumar, S/o. Late Lokanath Aged 39 years, 4. Miss. L.Suchitra D/o. R.Lokanath, Aged about 35 years, Rep. by SPA holder, Kiran Kumar, S/o. Late Lokanath Aged 39 years, Appellant 2 to 4 are R/at No.19, 3rd Stage, 4th Block, Sharada Colony, Basaveshwaranagar, Bengaluru-560079.
5. M/s. Prestige Auto Products A partnership concern Represented by its Partners 1) K.S.Mani, 2) R.Lokanath No.7, SSI Area, 1st Cross, Rajajinagar, Bengaluru-560010.
(By Sri. Basavaraj R Bannur, Advocate) AND 1. K.Vasudeva, Aged about 65 years, S/o. Late M.Kariyanna, 2. Mahesh V.Gujjar, Aged about 31 years, S/o. K.Vasudeva, …Appellants Both are R/at No.58, Hospital Road, 11th Cross, Kilari Road, Bengaluru-560053.
(By Sri. G.S.Venkatasubbarao, Advocate) …Respondents This RFA is filed under Section 96 of CPC against the judgment and decree dated 09.10.2018 passed in O.S.No.1291/2013 on the file of the XXXIV Additional City Civil and Sessions Judge, Bengaluru, partly decreeing the suit for ejectment.
This RFA coming on for admission this day, the court delivered the following:
JUDGMENT The defendants in O.S.No.1291/2013 on the file of Addl. City Civil and Sessions Judge, Bengaluru, have preferred this appeal challenging the judgment and decree dated 9.10.2018.
2. The respondents being the plaintiffs instituted a suit for ejecting the appellants from a portion of property bearing no.7 situated at S.S.I.Area, 1st Cross, Rajajinagar, Bengaluru. It is stated that this portion consists of two units, the 1st unit measuring East to West 30 ft. and North to South 20 ft. and the 2nd unit measuring East to West 18 ft. and North to South 16 ft. (referred to as ‘schedule property’ hereafter). The plaintiffs pleaded that Smt. D.Rajamma, the mother of the 1st plaintiff and grandmother of 2nd plaintiff inducted the defendants 1 and 2 as her tenants in respect of the schedule property. Rajamma died leaving behind a will in favour of the 2nd plaintiff. The 1st plaintiff is the father of the 2nd plaintiff. Since the plaintiffs wanted the schedule property for their self occupation, they terminated the tenancy by issuing a notice on 18.01.2013. The defendants’ failure to vacate the schedule property resulted in a suit being filed for ejecting them and damages at the rate of Rs.30,000/- per month.
3. Defendant no.2 died during pendency of the suit and his legal representatives came on record. Defendant no.2(a) filed written statement contending mainly that the schedule property was taken by them on a monthly rental basis in the year 1983. They were paying rent of Rs.11,000/- per month and they had also paid security deposit of Rs.85,000/- to the plaintiffs. Defendant no.1 is running an industry in the schedule property and has been manufacturing electronic components. They never committed default in paying the rent. On 12.02.2011, there was renewal of lease up to 12.02.2021 with enhancement of rent from Rs.9,500/- to Rs.11,000/- per month. There came into existence new lease agreement, but the plaintiffs did not give them a copy of the new agreement. The plaintiffs have suppressed the fact of the renewal of the lease. They also contended that notice of termination of the lease was not in accordance with law. They pleaded for dismissal of the suit.
4. The trial court after appreciating the evidence recorded on the issues framed by it, came to conclusion that the suit should be partly decreed. The trial court directed the defendants to hand over the vacant possession of the schedule property to the plaintiffs within two months from the date of judgment and pay Rs.18,000/- per month towards damages from the date of suit till realization.
5. Questioning the correctness of the judgment, the learned counsel for the appellants/defendants argued that the termination notice issued by the respondents was not in accordance with Section 106 of the Transfer of Property Act (for short hereafter referred to as ‘the Act’). Though there was no written agreement between the parties, the lease was for manufacturing purpose and therefore six months prior notice was necessary to be issued.
5.1. The 2nd point that he argued was that after issuing termination notice, the respondents received rent from the appellants and this has been admitted in the cross- examination by DW-1. By accepting the rent, the respondents waived their right to evict the appellants. He referred to Section 116 of the Act to argue that the appellants became tenants by holding over and to evict them, notice should have been issued again and since this was not done, the suit was bad.
5.2. The 3rd point that he argued was that the trial court should not have granted decree for paying Rs.18,000/- per month towards damages without holding an enquiry. In the absence of any evidence, directing the appellants to pay damages of Rs. 18,000/- p.m. was illegal and therefore he argued for allowing the appeal. In support of his arguments he has placed reliance on the following decisions:
i. Inder Sain Bedi (Dead) by LRs. Vs. Chopra Electricals - [(2004) 7 SCC 277] ii. Ram Kumar Das Vs. Jagadish Chandra Deo and others – [AIR 1952 SC 23] iii. M/s Auto World, Bangalore Vs. Smt. K.V. Sathyavati - [AIR 2015 Kar. 128] iv. Gopalakrishna Pillai and others Vs. Meenakshi Ayal and others – [AIR 1967 SC 155].
6. The learned counsel for the respondents argued that the respondents do not dispute the fact that manufacturing process is going on in the schedule property. The tenancy should be treated as from month to month because there was no registered instrument of lease. In a situation like this, the tenancy could be terminated by issuing 15 days prior notice. With regard to granting of damages, he argued that it was not necessary to hold an enquiry always. The respondents had placed sufficient material and based on this the trial court came to conclusion to fix the quantum of damages. Impugned order is not erroneous. The appeal is devoid of merits and therefore it should be dismissed. The learned counsel referred to the following judgments in support of his arguments :-
i. M/s Park Street Properties (Pvt.) Ltd., Vs. Dipak Kumar Singh and another [(2016 9 SCC 268)] ii. Samir Mukherjee Vs. Davinder K.Bajaj and others – [2001 (5) SCC 259] iii. Rajiv Kumar Gupta and another Vs. Somashekar Murthy @ H.P.Somashekar and others – (RFA.No.976/2013).
7. I have considered the points urged by learned counsel for the appellants and the respondents. The trial court has drawn conclusions that there is no dispute with regard to relationship of landlord and tenant between the plaintiffs and the defendants. The plaintiffs terminated the tenancy by issuing a notice as per Ex.P.2. There was due service of notice on the defendants as evidenced by Ex.P.3 to P.5 and therefore the defendants are liable to be evicted.
With regard to damages claimed by the plaintiffs at the rate of Rs.30,000/- per month, the trial court has referred to an answer given by DW.1 in the cross-examination that the schedule property would have fetched not more than Rs.18,000/- to Rs.20,000/- rent on the date of suit and therefore a reasonable amount of Rs.18,000/- per month could be awarded towards damages to the plaintiffs instead of Rs.30,000/- as claimed by them.
8. If the findings of the trial court are seen, it becomes very evident that the points urged by the learned counsel for the appellants were not canvassed before trial court and therefore there was no occasion for the trial court to deal with that issue. What is mainly disputed in this appeal is the termination of tenancy by issuing 15 days of notice. According to the appellants’ counsel, since the schedule property is being used for manufacturing process, the tenancy should have been terminated by issuing a prior notice of six months. He has referred to Section 106(1) of the Act which reads as below:
“106. Duration of certain leases in absence of written contract or local usage (1) In the absence of a contract or local law or usage to the contrary, a lease of immoveable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months' notice; and a lease of immoveable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days' notice.”
9. For interpretation of Section 106(1) of the Act, in my opinion it is better to consider Section 107 of the Act first. This section deals with creation of lease of immovable property for different periods. A lease from year to year or for any term exceeding one year or reserving a yearly rent can be made only by a registered instrument. This is the first category. Leases not falling in the first category can be made either by registered instrument or by oral agreement accompanied by delivery of possession. Registration is not compulsory for this category of lease. There can be an instrument of lease without registration.
10. Now if Section 106(1) of the Act is considered it is possible to state that it also contains two parts, firstly with regard to lease of an immovable property for agricultural or manufacturing purposes, and secondly for other purposes. If there is a contract between the parties or local law or usage with regard to period of lease and its termination, the parties are bound by it. If there is no contract or usage or local law applicable to lease for agricultural or manufacturing purposes, deeming provision comes into operation to treat the period of lease as from year to year which is terminable by issuance of six months notice. In case of lease for other purposes also the contract between the parties or the local law or usage is the deciding factor and in the absence of it deeming provision arises to treat the lease as from month to month which can be terminated by issuance of 15 days notice. At times it so happens that property will be leased for manufacturing or agricultural purpose for one year or exceeding one year without obtaining a registered instrument and in that event, lease is not bad, but it falls under second category of Section 107 of the Act and for its termination, 15 days notice is sufficient. If there comes into existence a lease in relation to agricultural and manufacturing purpose for a year or exceeding a year without a registered instrument, it is not a valid lease and therefore it falls under second category of Section 107 of the Act. It is to be stated here that a lease for any purpose other than agricultural or manufacturing purpose for a year or exceeding a year falls under second category of Section 106(1) of the Act if there is no contract between the parties with regard to termination of such lease; and in that kind of a situation, the lease can be terminated with advance notice of 15 days, 6 months notice is not necessary.
11. The learned counsel for the appellants has referred to two judgments of the Supreme Court in the case of Inder Sain Bedi and Ram Kumar Das (supra). This is a misplaced reliance by him. These judgments do not help the appellants. In Inder Sain Bedi (supra), the facts are that initially the respondent took the property on licence for a period of 11 months and after expiry of licence period the appellant accepted the respondent as his tenant. The appellant served a notice under Section 106 of the Act on 06.03.1989 terminating the tenancy from 31.05.1989.
Validity of the notice arose for consideration and it was held by the trial court that since clause 15 of the lease/licence document provided for termination of tenancy by issuing two months notice, notice was not bad in law. The High Court reversed the findings of the trial court and allowed the appeal. But the Hon’ble Supreme Court restored the judgment of the trial court upholding that the contract between the parties for terminating the tenancy by issuing two months notice.
12. In the case of Ram Kumar Das (supra), the lease was not for manufacturing purpose, rather it was to build structures on the land. In para 13 of this judgment, it is clearly held that Section 106 of the Act is applicable when there is no period agreed upon between the parties and in such cases duration has to be determined by reference to the object or purpose for which tenancy is created. Therefore the principles laid down in these cases are very clear that only valid contracts between the parties decide as to how the lease has to be terminated and if the contract is silent with regard to duration and termination of lease, Section 106 of the Act will apply.
13. The learned counsel for the respondents has referred to two judgments of the Supreme Court in the case of Samir Mukheerji and M/s. Park Street Properties (supra). In the case of Samir Mukheerji (supra), principle is very clearly laid down that in case of lease for manufacturing purpose without obtaining registered instrument, issuance of 15 days notice for termination of the lease is proper. In the case of M/s. Park Street Properties (supra) also the same position of law is reiterated.
14. Therefore it takes me to conclude that the argument of the appellants’ counsel that the notice of termination is invalid in the present case cannot be accepted. Though in the schedule property, manufacturing process is going on, there is no valid contract between the parties and the tenancy is therefore from month to month. Notice issued by the respondents is valid.
15. The learned counsel for the appellants raised another point that the respondents lost right to evict the appellants having accepted rent from the former after issuance of termination notice. He submitted that the appellants became tenants by holding over according to Section 116 of the Act. In support of his argument he has relied upon the judgment of this court in the case of M/s. Auto World (supra). I do not think that this argument can be accepted. The respondents do not dispute the fact of receiving rents after issuing termination notice and also during pendency of suit. Mere acceptance of rent after termination of lease does not result in waiver of right to evict a tenant. It all depends on the intention of the landlord. The judgment of the Supreme Court in the case of Swaroop Singh Gupta Vs. Jagadish Singh (AIR 2006 SC 1734) and a judgment of this Court in the case of Vasanth Kumar D. Shah Vs. Sugandha Raman [2006 (6) AIR KAR R 308] were cited before the learned Judge who decided the case of Auto World (supra). It was held that the principles laid down in the judgment of the Supreme Court and this Court were best authorities for the cases decided therein. Another earlier judgment of the Supreme Court in the case of Tayabali Jaffarbhai Tankiwala Vs. M/s. Asha and Company [1970(1) SCC 46] was followed to hold that there was waiver of notice of termination of lease. In my opinion the judgment of the Supreme Court in the case of Swaroop Singh Gupta (supra) being later in point of time holds the field and therefore the judgment in M/s. Auto World, Bangalore (supra) cannot be followed. Even otherwise acceptance of rent after termination of tenancy by issuing a notice does not take away the right of the landlord to evict his tenant. Payment of rent is an obligation on the tenant. In a suit for ejectment if the landlord is entitled to claim arrears of rent or damages for use and occupation, mere acceptance of rent after issuance of notice and during pendency of the suit does not alter the right of landlord to evict his tenant.
16. With regard to another argument that enquiry under Order 20 Rule 12 of CPC was necessary for determining the damages, it has to be stated that enquiry is not always necessary. To decide whether a separate enquiry is necessary or not lies within the discretionary power of the court. The learned counsel for the appellants has relied upon judgment of the Supreme Court in the case of Gopalkrishna Pillai (supra). The principle rather laid down in this case is that the court has to decide whether an enquiry into future mesne profits is necessary or not. Therefore it is clear that enquiry is not mandatory. If one of the issues framed in the suit relates to awarding of damages and if the court finds that there are sufficient materials for fixing the damages to be paid by the tenant, the court can arrive at a conclusion at that point of time itself without ordering for separate enquiry. In the case on hand DW-1 admitted in the cross-examination that the schedule property would have fetched rent of Rs.18,000/- to Rs.20,000/- on the date of suit and this answer of DW-1 was considered by the trial court for awarding damages of Rs.18,000/- per month although the respondent’s claim was for Rs.30,000/- per month. There is no infirmity in this finding of the trial court.
The above discussion takes me to conclude that the appeal fails and accordingly it is dismissed with costs.
Sd/- JUDGE sd