IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 15..09..2011 CORAM THE HON’BLE Mr. M.Y. EQBAL, CHIEF JUSTICE C.R.P. (NPD) No.4240 of 2010 and W.P. No.3228 of 2011 C.R.P. (NPD) No.4240 of 2010 : 1. Alaudin 2. Safya Kader Moideen ..Petitioners versus A.Sathar ..Respondent PRAYER: Revision Petition filed under Section 25 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 as amended by Act 23 of 1973 and Act 1 of 1980 against the order of the Rent Control Appellate Authority and Subordinate Judge, The Nilgiris at Uthagamandalam dated 9th June, 2010 made in Rent Control Appeal No.2 of 2008 reversing the fair and final order dated 30.10.2007 passed in R.C.O.P.No.9 of 2005 on the file of the Rent Controller, Coonoor. ------------ W.P.No.3228 of 2011 : A.Sathar ..Petitioner versus 1. The Rent Control Appellate Authority/ Subordinate Judge, The Nilgiris District, Uthagamandalam. 2. The Rent Controller, Coonoor, The Nilgiris District. 3. Alaudeen 4. Shafia Khader Moideen ..Respondents PRAYER: Petition filed under Article 226 of the Constitution of India for the issuance of a Writ of Certiorari to call for the records of the 1st and 2nd respondents in R.C.A.No.2 of https://hcservices.ecourts.gov.in/hcservices/ 2008 dated 09.06.2010 and R.C.O.P.No.9 of 2005 dated 30.10.2007 and quash the same of the 2nd respondent insofar as the agreement dated 01.07.2001 and finding of the landlord and tenancy relationship. ------------- Mr.S.K.Raghunathan :: For Petitioners in C.R.P & For Respondents 3 & 4 in W.P. Mr.D.Rajendiran :: For Petitioner in W.P. & For Respondent in C.R.P. ------------- O R D E R The above Civil Revision Petition is directed against the judgment and decree dated 09.06.2010 passed by the Rent Control Appellate Authority-cum-Subordinate Judge of the Nilgiris at Uthagamandalam in R.C.A.No.2 of 2008, whereby the Appellate Authority reversed the order dated 30.10.2007 passed by the Rent Controller, Coonoor in R.C.O.P.No.9 of 2005. 2. The facts of the case lie in a narrow compass. The first petitioner in the C.R.P. viz., N.Alaudeen being the owner of the suit premises filed R.C.O.P.No.9 of 2005 against the respondent therein, who is his own son, for eviction on the ground of wilful default under Section 10(2)(i) and also for his own use and occupation under Section 10(3)(a)(i) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (for short “the Act”). The case of the first petitioner is that the suit premises was leased out by him to his son, the respondent, on 01.07.2001 on a monthly rent of Rs.2,000/-. At the time of lease the respondent paid a sum of Rs.20,000/- as advance and agreed to pay the monthly rent regularly. The petitioner’s further case is that the respondent right from the date of tenancy did not pay the rent, and thereby, committed default. The first petitioner, therefore, by notice dated 12.07.2004 terminated the tenancy on the ground of wilful default in payment of monthly rent for the period between 01.07.2001 and 31.06.2004, and also on the ground of owner’s occupation requiring the premises for his another son A.Hanifa, and directed the respondent to vacate the building and hand over possession of the same. The notice was duly acknowledged by the respondent, but he did not send any reply. Hence, a Rent Control Original Petition in R.C.O.P.No. 9 of 2005 was filed on the file of the Rent Controller, Coonoor. 3. The respondent contested the petition by filing a written statement denying the execution of the lease deed dated 01.07.2001, and further alleged that he was permitted by his father, the first petitioner, to occupy the premises and as such, there is no relationship of landlord and tenant between them. The respondent’s further case is that he has paid Rs.1 lakh to his father for the construction of the suit premises. https://hcservices.ecourts.gov.in/hcservices/ 4. The learned Rent Controller, Coonoor, after holding an enquiry and giving opportunity of hearing to the parties, allowed the petition and ordered eviction of the respondent holding that the relationship of landlord and tenant between the first petitioner and the respondent had been established, and the respondent committed default in the payment of rent, and also the first petitioner’s requirement of the premises for the use of his another son A.Hanifa is bona fide. 5. Aggrieved by the order of eviction passed by the learned Rent Controller, Coonoor the respondent preferred an appeal before the Rent Control Appellate Authority-cum-Sub Judge, Uthagamandalam being R.C.A.No.2 of 2008. Pending hearing in the appeal the first petitioner-landlord filed M.P.No.19 of 2008 under Section 11(1) of the Act praying for a direction to the respondent to pay or deposit the arrears of rent amounting to Rs.1,82,000/- for the period between 01.07.2001 and 31.01.2008, and on the respondent failing to deposit the arrears of rent the appeal to be strike off from the file. The Appellate Authority by his order dated 10.04.2008 disposed of the said petition and directed the respondent to deposit the arrears of rent to the tune of Rs.1,82,000/-. The respondent challenged the said order before this Court by filing C.R.P.No.2737 of 2008. This Court passed an order directing the respondent to deposit 50% of the arrears of rent as a condition precedent for staying the order of the learned Appellate Authority passed in the said interlocutory application. In compliance of the said interim order the respondent deposited 50% of the arrears of rent. However, at the time of the final hearing in the said C.R.P. the respondent offered to deposit the balance 50% of the arrears of rent, hence, the said revision petition was allowed and the learned Appellate Authority was directed to first render a finding as to the relationship of landlord and tenant between the first petitioner and the respondent, and thereafter, pass final judgment in the appeal. 6. While the appeal was pending before the learned Appellate Authority, the first petitioner-landlord executed a Deed of Settlement (Gift Deed) on 30.03.2009 in favour of his daughter, who is none other than the second petitioner in the present Civil Revision Petition, transferring the suit premises to her name. The first petitioner, thereafter, filed an Interlocutory Application being I.A.No.35 of 2009 for impleading his daughter as the second respondent in the pending appeal, which was accordingly allowed on 26.10.2009, and the daughter being the settlee/donee was impleaded as the second respondent in the pending appeal. The appeal was, thereafter, finally heard by the Appellate Authority, who by his judgment dated 09.06.2010 allowed the appeal. The Appellate Authority recorded a finding that the Lease Deed executed between the parties is true and valid, and that the respondent committed default in https://hcservices.ecourts.gov.in/hcservices/ payment of monthly rents. The Appellate Authority further held that there exists relationship of landlord and tenant between the first petitioner/landlord and the respondent. Further, the Appellate Authority taking notice of the subsequent events i.e., the transfer of the premises by the first petitioner/landlord to his daughter/second petitioner during the pendency of the appeal, held that the first petitioner ceased to be a landlord, and the relationship of landlord and tenant between the first petitioner and the respondent ceased to exist, and consequently a decree for eviction cannot be passed either on the ground of owner’s requirement or on the ground of wilful default. The Appellate Authority further held that the arrears of rent claimed by the first petitioner loses its character as arrears of rent and it could be deemed to be an actionable claim under Section 130 of the Transfer of Property Act. Aggrieved by the said order, the petitioners have preferred the present revision petition. 7. The respondent on the other hand filed W.P.No.3228 of 2011 against the finding of the Appellate Authority whereby the Lease Deed is held to be true and valid and that there exists a relationship of landlord and tenant. 8. Since these two matters are inter-connected, they are heard together, and disposed of by this common order. 9. Learned counsel appearing for the first petitioner-landlord assailed the impugned judgment passed by the Appellate Authority as being illegal and wholly without jurisdiction. Learned counsel firstly contended that when the findings on the issue of relationship of landlord and tenant, and wilful default in payment of rent have been upheld by the Appellate Authority, the order of eviction ought to have been passed instead of holding that after Settlement Deed was executed by the first petitioner the relationship ceased to exist. Learned counsel submitted that even after the transfer of premises by the first petitioner to his daughter/second petitioner, the second petitioner is entitled to get a decree on the ground of wilful default. Learned counsel submitted that rent is payable to a building and the definition of ‘landlord’ under Section 2(6) of the Act includes person who is receiving or is entitled to receive the rent of a building, whether on his own account or on behalf of another or on behalf of himself and others or as an agent, trustee, executor, administrator, receiver or guardian or who would so receive the rent or be entitled to receive the rent if the building were let to a tenant. Therefore, the respondent is liable to pay the rent for the building and the second petitioner as landlord is entitled to receive the rent. Learned counsel further submitted that the first petitioner has secured an order of eviction against the respondent before the Rent Controller and therefore, the right to evict the respondent passes on to the second petitioner on the terms contained in the Deed https://hcservices.ecourts.gov.in/hcservices/ of Settlement. As against the verdict of the Appellate Authority that the arrears of rent claimed by the first petitioner losses its character as arrears of rent and it could only be termed as actionable claim, the learned counsel for the petitioners submitted that the default committed by the respondent in the payment of rent has culminated into an order and at the time of passing of the order the first petitioner was a landlord and continued to be landlord even at the time when the respondent filed the appeal before the Appellate Authority. The respondent continued to commit default in the payment of rents even during the pendency of the Appeal proceedings, which necessitated the first petitioner to invoke Section 11(1) of the Act under which no tenant against whom an application for eviction was made by a landlord under Section 10 of the Act shall be entitled to contest the application before the Controller under that Section or to prefer any appeal under Section 23 of the Act against any order made by the Controller , unless he pays to the landlord or deposits with the Court all arrears of rent due in respect of the building upto the date of payment or deposits and continues to pay or to deposit any rent which may subsequently become due. Learned counsel submitted that the respondent complied with the order passed by the Appellate Authority under this Section (viz., order dated 10.04.2008 in M.P.No.19 of 2008 in R.C.A.No.2 of 2008) only when he preferred his earlier revision petition in C.R.P.No.2728 of 2008 by depositing 50% of the rent due for the period between 01.07.2001 and 31.01.2008, and he continued to commit default even after the execution of Settlement Deed in favour of the second petitioner. Learned counsel for the petitioners further submitted that the finding of the Appellate Authority that there existed a relationship of landlord and tenant between the first petitioner and the respondent will come to the benefit of the second petitioner. Therefore, the Appellate Authority is erred in finding that with the execution of Settlement Deed the first petitioner loses his right of evicting the respondent. Further, the first petitioner is on record in the present revision petition as well as before the Appellate Authority, which will clearly indicate that the petitioners have not given up their right to execute the order of eviction obtained against the respondent by the execution of the Settlement Deed. 10. The sole question that falls for consideration in the civil revision petition is as to whether the second petitioner, who is the transferee-landlord, is entitled to evict the respondent on the ground of wilful default committed prior to the date of settlement (gift made in favour of the second petitioner); in other words, whether the lower appellate court has committed an error of law in holding that after the settlement, the relationship of landlord and tenant ceased to exist and the second petitioner, who is the transferee, is not entitled to take the benefit of the decree passed by the Rent Controller. https://hcservices.ecourts.gov.in/hcservices/ 11. Before I proceed to discuss the law applicable to the facts and circumstances of the present case, I would like to quote hereinbelow some of the relevant clauses of the settlement deed. The Settlement Deed (Gift Deed) was executed on 30.3.2009 by the first petitioner in favour of his daughter, the second petitioner, whereby the suit premises was settled in favour of the second petitioner. The relevant portion of the settlement deed reads as hereunder :- “In pursuance of the said agreement and in consideration of the natural love and affection which the Settlor has borne for the Beneficiary his daughter and in fulfilment of the Settlor’s desire to provide for the Beneficiary, the Settlor doth hereby settle, grant, convey and assign unto the Beneficiary the property described in the Schedule below : Together with all rights, easements and privileges appertaining thereto – And Together with all the right title and interest of the Settlor INTO AND UPON the said property TO HAVE AND TO HOLD the said property unto the Beneficiary forever free from all encumbrances claims and demands; And the Settlor has also delivered possession of the property to the Beneficary this day; And the Settlor doth hereby further covenants with the Beneficiary that the Settlor has good right and full power to settle, grant, assign and convey the property in question unto the Beneficiary in the manner aforesaid and that the Beneficiary may enjoy the same hereafter as the absolute owner thereof without any let or interruption or disturbance by the Settlor or anyone claiming under or in trust for the Settlor including the Settlor’s sons and the other daughter and that whenever reasonably required by the Beneficiary and at the cost of the Beneficiary, the Settlor will do sign and execute all other acts, deeds and writings that may be necessary for further and better assuring the property unto the Beneficiary in the manner aforesaid. The Beneficiary hereby declares that she has accepted the Settlement in her favour and has also taken possession of the property from the settler this day.” 12. Section 109 of the Transfer of Property Act lays down the rights of a transferee in respect of a leased property. The said section reads as under:- “109. Rights of lessor’s transferee. – If the lessor transfers the property leased, or any part thereof, or any part of his interest therein, the transferee, in the absence of a contract to the contrary, shall possess all the rights, and, if the lessee so elects, be subject to all the liabilities of the lessor as to the property or part transferred so long as he is the owner of it; but the lessor shall not, by reason only of such transfer cease to be https://hcservices.ecourts.gov.in/hcservices/ subject to any of the liabilities imposed upon him by the lease, unless the lessee elects to treat the transferee as the person liable to him: Provided that the transferee is not entitled to arrears of rent due before the transfer, and that, if the lessee, not having reason to believe that such transfer has been made, pays rent to the lessor, the lessee shall not be liable to pay such rent over again to the transferee. The lessor, the transferee and the lessee may determine what proportion of the premium or rent reserved by the lease is payable in respect of the part so transferred, and, in case they disagree, such determination may be made by any Court having jurisdiction to entertain a sit for the possession of the property leased.” 13. From a bare reading of the aforesaid provision it is manifest that if the lessor transfers the property leased, or any part thereof, the transferee in the absence of any contract to the contrary, shall possess all the rights of the lessor as to the property or part thereof transferred so long as he is the owner of it. The proviso to this section makes it clear that the assignee has the right to receive rent from the tenant, in the absence of any contract to the contrary. In other words, on and from the date of transfer of the property leased, the transferee steps into the shoes of the landlord and he becomes entitled to receive the rent from the tenant, who is in possession of the leased property. However, so far as arrears of rent due and payable by the tenant before the transfer was effected in favour of the transferee is concerned, in the absence of any contract to that effect, the transferee cannot be entitled to recover the rent from the tenant. 14. In the light of the aforesaid proposition of law, as stated above, the question that arises for consideration is as to whether the transferee impleaded in a suit for eviction of a tenant can maintain or prosecute the suit for a decree of eviction on the ground of wilful default for the period prior to the institution of the suit. 15. In the case of Sheikh Noor and another Vs. Sheikh G.S. Ibrahim reported in (2003) 7 S.C.C. 321, the Supreme Court after considering the provisions of Section 109 of the Transfer of Property Act held as under:- “18. In view of the cases referred to above, in our opinion, the correct position of law is that a transferee is not entitled to recover the arrears as rent for the property on transfer unless the right to recover the arrears is also transferred. If right to recover the arrears is assigned, then the transferee landlord can recover those arrears as rent and if not paid, maintain a petition for eviction under https://hcservices.ecourts.gov.in/hcservices/ the rent laws for those arrears as well. Since in this case we have found that there was an assignment of right to recover the arrears in favour of the respondent transferee he was entitled to recover the same as arrears of rent. If that period is taken into consideration then the appellant tenants were certainly in arrears of rent for more than six months and became liable to be evicted from the premises in dispute on the ground of default on their part in payment of rent for more than six months on the date of filing the suit.” 16. In Champabai Manilal Shah V. Anandrao Ramchandra Patil reported in (1993) 1 Mah L.J. 370, the fact was that on 26.4.1974, owner of the suit property sold the same to the plaintiff. On 08.11.1974 the previous landlord and the plaintiff issued notice to the defendant informing him that he was in arrears of rent from 01.05.1971 at the rate of Rs.30/- per month and that the plaintiff had a right to recover the same. The defendant replied stating that rent had been paid till June, 1974 at the agreed rate of Rs.25/- per month. On 12.12.1974 demand notice under the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 was issued claiming arrears from 01.05.1971 at the rate of Rs.30/- per month. As the arrears were not paid, suit for possession of the premises was filed on the grounds of arrears of rent from 01.05.1971 as also bona fide requirement of the landlord. The trial court passed decree for eviction on the ground of arrears of rent which decree was confirmed by the appellate Court. In writ petition by the tenant it was contended that the right to recover rent was not transferred by virtue of sale deed dated 24.06.1974 nor was there any assignment of the right to recover rent. The Bombay High Court held thus :- “….By virtue of the notice of attornment dated 08.11.1974, the defendant was informed about the sale of the property but the right to recover arrears of rent was retained by the previous landlord and thus it was not possible for the plaintiff to recover the arrears of rent payable to the earlier landlord. Cause of action could not be based upon a ground or right which did not really exist. There being no assignment of right to recover arrears of rent from 01.05.1971 till the sale of property and subsequent arrears being for a period of less than 6 months, the case was governed by S.12(3)(b) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 as it then stood with which there was total compliance…..”. 17. In the case of S.V.Periasamy & Sons by its Partner S.V.Periasamy Nadar Vs. R. Senthil Kumar reported in 1997 (1) L.W. 527, a similar question arose for consideration before this Court as to whether the transferee-landlord will be entitled to get a decree for eviction on the ground of non-payment of rent for the period https://hcservices.ecourts.gov.in/hcservices/ prior to the date of transferee. In that case, against the order of eviction passed by the Authority under Section 10(2)(i) and 14(1)(b) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 an appeal was preferred by the tenant. During the pendency of the appeal the building was sold. Purchaser got themselves impleaded as respondents in the said appeal. The Appellate Authority affirmed the order of the Rent Controller. The said order was challenged by the tenant. In the said circumstances, this Court allowed the revision and held as under:- “19. In view of this settled position of law, the cause of action on the basis of which first respondent filed eviction petition no more survives. The cause of action is that the tenant committed wilful default in paying the rent. On that date, the first respondent was entitled to collect the amount as arrears of rent. Once he ceased to be the landlord, he can recover the amount only as a debt, and, by the time eviction order was passed, he ceased to be a landlord. Right as landlord, which entitled to sue for eviction, is transferred to respondents 2 and 3. Under Ex.A- 17, even that debt has not been assigned. Even if there is an assignment, that will amount to only an actionable claim and will cease to be arrears of rent. For getting eviction, the nature of the amount due from the tenant must be arrears of rent. The relationship of landlord and tenant ceases, and the previous landlord only becomes a creditor and the tenant becomes a debtor. The eviction petition on the ground of default in payment of rent thereafter cannot be continued either by the previous landlord, or by the purchaser on the basis of the same cause of action.” 18. In the case of A. Jaganathan Vs. S. Kalyani reported in (2007) 6 M.L.J. 222, a learned single Judge of this Court, after careful consideration of the relevant provisions of law, held that in a case of sale of the property by the landlord, pending eviction proceeding on the ground of wilful default, the cause of action originally available to the landlord will not survive and the order of eviction in favour of the transferee cannot be sustained. 19. From a perusal of the contents of the gift deed, it is evidently clear that the first petitioner settled and assigned the property unto the second petitioner together with all right, title and interest, to have and to hold the property free from all encumbrances, claims and demands. No specific assignment has been made to recover the arrears of rent from the respondent for the period prior to such transfer and assignment by way of gift. When such a right to recover arrears of