IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE & THE HONOURABLE MRS. JUSTICE M.C.HARI RANI TUESDAY, THE 20TH JANUARY 2009 / 30TH POUSHA 1930 RCRev..No. 209 of 2003() ------------------------ RCA.191/2002 of VI ADDL.DISTRICT COURT, ERNAKULAM IA. NO. 1644/02 IN RCP.175/1999 of I ADDL.MUNSIFF COURT, ERNAKULAM. .................... PETITIONERS/RESPONDENTS-PETITIONERS: -------------------------------------------------------- 1. V. GOVINDAN, SON OF VATTU, THUNDIPARAMBIL HOUSE, DOOR NO.49/1244, CHUTTUPADU KARA, EDAPPALLY NORTH VILLAGE, KANAYANNUR TALUK. 2. V.G. JAYARAM, SON OF GOVINDAN, THUNDIPARAMBIL HOUSE, DOOR NO.49/1244, CHUTTUPADU KARA, EDAPPALLY NORTH VILLAGE, KANAYANNUR TALUK. 3. V.G. DINESH, SON OF GOVINDAN, THUNDIPARAMBIL HOUSE, DOOR NO.49/1244, CHUTTUPADU KARA, EDAPPALLY NORTH VILLAGE, KANAYANNUR TALUK. BY ADV. SRI.T.K.VENUGOPALAN SRI.SHIBU JOSEPH SRI.V.DEVAN RESPONDENT(S): --------------- P.A. RASHEED, PROPRIETOR, TIME 'N' TUNE, DOOR NO.40/8911 (NEW) MEENAKSHI ESTATE BUILDINGS, RAJAJI ROAD, KOCHI-35. ADV. SRI.A.K.SESHADRI FOR R1 SRI.P.SATHISAN FOR R1 THIS RENT CONTROL REVISION HAVING BEEN FINALLY HEARD ON 20/01/2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: PIUS C. KURIAKOSE & M.C.HARI RANI, JJ. ----------------------------------------------- R.C.R. No. OF 2003 ----------------------------------------------- Dated this the 20th day of January, 2008 O R D E R PIUS C.KURIAKOSE , J. The landlords are the revision petitioners. They sought for eviction of the respondent-tenant who is conducting business in time keepers of various types by name 'Time'n'Tune' in the schedule building which is situated at a spot which can easily be described as the heart area of Cochin City from the point of our view, the junction where the Mahatma Gandhi Road meets the Rajaji Road. The ground for eviction invoked were Section 11(2) (b) arrears of rent and Section 11(3) bona fide need for own occupation. The R.C.P. was instituted by the revision petitioners relying on the lease deed executed by the respondent in favour of one Narayanan, the brother of the first revision petitioner on 28.7.1989. It was averred that consequent on partition of the common properties amongst the above brother Narayanan, the first petitioner and others, the ownership of the schedule building became alloted towards the share of the first revision petitioner and that the respondent-tenant attorned to the revision RCR. N0. 209/03 -2- petitioners and was paying the rent directly to the revision petitioners. 2. The respondent filed detailed statements of objections. He contended through the written statement of objection that at the time of construction of the building, he paid a sum of Rs.3 lakhs. He also contended that a further amount of Rs.1 lakh was paid to Shri Narayanan, brother of the first revision petitioner who agreed to adjust the amount towards the rent payable. He further contended that for making substantial alterations in the building for the purpose of business, such as changing of the red oxide flooring to marble and granite flooring, he expended a sum of Rs.10 lakhs with the consent of Shri Narayanan. According to him, all these payments and investments were made by him in view of an agreement by Narayanan that he will either be allowed to purchase the building, in which case the amounts invested by him will be adjusted towards the purchase price and if the purchase is not materialised, he will be allowed to hold the building as a permanent tenant on condition that every three years, the original contract rent of Rs.900/- will stand increased RCR. N0. 209/03 -3- by 5%. Significantly, the lease deed of 28.7.1989 specifically relied on in the Rent Control Petition was not disputed by the respondent. On the contrary, while conceding the existence of that lease deed and conceding that at least as regards the rent liability, that lease deed was being acted upon. It was contended that the above lease deed was got executed only for the purpose of income-tax. After filing objections, I.A.No.1644/02 was filed by the respondent, seeking an order that the claim or permanent tenancy raised by him to the RCP be considered as a preliminary issue. To that I.A., the revisions petitioners filed objections denying the claim of the respondent and contending that the case does not involve any claim for permanent tenancy. The Rent Control Court enquired into the I.A. and evidence at the inquiry consisted of Exhibits A1 to A1(d) receipts and PW1, the testimony of the tenant/ petitioner. On the side of the respondents/landlords, the same consisted of documents Exhibits B1 to B3 and counter evidence of the first revision petitioner as RW1, apart from Exhibit C1 commission report. That court evaluated the evidence and would come to the conclusion that RCR. N0. 209/03 -4- the claim of permanent tenancy has been raised without any bona fide and with the objective of protracting the proceedings for eviction. 3. The respondent preferred appeal against the order of the Rent Control Court as R.C.A.No.191/2002 and the Appellate Authority would in reversal of the finding of the Rent Control Court found that the respondent's claim of permanent tenancy is a bona fide one. It is impugning the above order of the Appellate Authority that the present petition has been filed by the landlords invoking jurisdiction under Section 20 of the Buildings (Lease and Rent Control Act) (Act 2 of 1965). We have heard the submissions of Mr.T.K.Venugopalan, the learned counsel for the revision petitioners and those of Shri A.K.Sheshadri , learned counsel for the respondent. We have perused the entire records, since it is divergent finding which has been entered by the authorities below. 4. The relevant statutory provision is the 2nd proviso to Section 11 and we shall quote sub-section (1) of Section 11 as follows: RCR. N0. 209/03 -5- 11. Eviction of tenants.-(1) Notwithstanding anything to the contrary contained in any other law or contract a tenant shall not be evicted, whether in execution of a decree or otherwise, except in accordance with the provisions of this Act: Provided that nothing contained in this Section shall apply to a tenant whose landlord is the State Government or the Central Government or other public authority notified under this Act. Provided further that where the tenant denies the title of the landlord or claims right of permanent tenancy, the Rent Control Court shall decide whether the denial or claim is bona fide and if it records a finding to that effect, the landlord shall be entitled to sue for eviction of the tenant in a Civil Court and such Court may pass a decree for eviction on any of the grounds mentioned in this Section, notwithstanding that the Court finds that such denial does not involve forfeiture of the lease or that the RCR. N0. 209/03 -6- claim is unfounded.” Thus in the terms of the above sub-section, it is obligatory that when the tenant denies the title of the landlord or claims a right of permanent tenancy, the Rent Control Court shall decide whether the denial or claim is bona fide and record a finding to that effect. If the finding of the Rent Control Court comes to be in favour of the tenant, the Rent Control Court will have to dismiss the RCP, relegating the landlord to the civil court. 5. Having gone through the pleadings, we find that the claim of permanent tenancy has not been specifically raised by the respondent-tenant. In fact, the landlords case of existence of rental arrangement between the parties by virtue of the original lease deed dated 28.7.1989 is not denied, though there is a contention that such a lease deed was got executed by the original landlord Narayanan from the respondent for avoidance of income-tax. Importantly, it is virtually conceded by the respondent that rent is being paid by the respondent without fail on the basis of the terms contained in that lease deed. When the execution of the lease deed is not disputed and when it is seen RCR. N0. 209/03 -7- that rent is being paid, accepting the terms contained in that lease deed, what is the period of lease will be of most importance. Unfortunately, neither sides have produced that lease deed before the authorities below. The case of the revision petitioners was that they do not have custody of that lease deed and that custody of the original part of that lease deed is with the original landlord Narayanan, with whom they have fallen apart. Further case was that the duplicate of that lease deed is with the respondent only. It is seen that I.A.No 1313/01 was filed by the revision petitioners before the Rent Control Court seeking a direction for issuance of summons to Shri T.V.Narayanan, the original landlord for the production of three documents including the original of the lease deed dated 28.7.1989 executed between Shri Narayanan and the respondent. The Rent Control Court did not issue summons to Narayanan for production of the documents mentioned in the I.A. Instead, what the Court did was to pass an order directing the respondent/tenant to produce the documents mentioned in the affidavit. The tenant who was examined as PW1 would concede in his evidence that the lease RCR. N0. 209/03 -8- deed as averred in the Rent Control Petition had been executed and that a copy of that lease deed though not a duplicate written on stamp paper was handed over to him at the time of execution of the lease deed. 6. We cannot approve the order passed by the Rent Control Court on the I.A. as if the I.A. was one for directing the tenant to produce the document. The Rent Control Court should have issued summons to Shri Narayanan for production of the original of the lease deed and failing such production could have called upon the respondent-tenant to produce the duplicate. We drew the attention of Mr.A.KSheshadri to the admission by RW1 that he is in custody of the duplicate copy of the lease deed and directed him to produce that lease deed. The response to our request was not enthusiastic. According to us, in view of the conceded position that the above lease deed is an unregistered lease deed, the same cannot be relied on at all as evidence of a permanent tenancy in view of Section 17(1)(d) and Section 49 of the Registration Act as explained by a Division Bench of this Court in Paul v. Saleena (2004(1) KLT 924) to which one of RCR. N0. 209/03 -9- us [PCK(J)] was also a party and the judgment of the Supreme Court in Sameer Mukharji v. Rabindar K.Bajaj (2001 (5) SCC 259). Moreover, it is nobody's case that the above unregistered lease deed contains a provision that the tenancy will be a permanent one. 7. It is now necessary to consider as to what is permanent tenancy in the context of the second proviso to Section 11(1). Act 2 of 1965 does not define the expression permanent tenancy. According to us permanent tenancy means a tenancy in perpetuity. The claim of permanent tenancy, therefore, means the claim of absolute immunity from eviction. On going through the statement of objections filed by the respondent to the Rent Control petition, we do not find any such specific claim raised by the respondent. The contentions raised are only that substantial amounts have been paid towards cost of construction of the building and also towards improving the building. There is a further claim that there was an agreement by the original landlord to convey the ownership of the building to the respondent and failing such conveyance, to allow the tenant RCR. N0. 209/03 -10- to hold the building permanently. But as rightly noticed by the Rent Control Court, the case pleaded in the statement of objection by the respondent-tenant has given a go-bye to a considerable extent when RW1 mount the box. On analysing the testimony of RW1, it is seen that his claim is only that he is entitled to hold the building for a minimum period of 30 years in view of the original oral agreement to sell the property to him and also in view of his payment of substantial amount of Rs.3 lakhs towards cost of construction and for improving the building. 8. We will deal with his case of having been agreed to convey ownership of the building to him. Importantly, he does not have a case that his jural status in the building is that of a person in possession pursuant to an agreement for sale of the property. Instead, he is conceding, both by pleading and by conduct that his status is that of a tenant. In our view, the claim of permanent tenancy can be set up only by a person who admits his status to be that of a tenant since the respondent himself has admitted his status to be that of a building tenant and since he is seen discharging the monthly rent at the rates agreed upon in RCR. N0. 209/03 -11- the lease deed. It is difficult to countenance his evidence based on an oral agreement for sale of the property to him. Moreover, we do not find even an iota of evidence let in by the respondent to prove the oral agreement for sale of the property. The case of oral agreement has been repelled on account of complete dearth of evidence. 9. Now, we will consider whether the payment of substantial amounts by the tenant towards construction and cost of the building and the expenditure of substantial amounts by him for improving the building for the purpose of doing business will confer any sort of fixity of the tenancy. We will immediately notice that in the context of the agreement that he will be allowed a permanent tenancy in view of his payment of amounts and expenditure of amounts and investments as claimed by him, he will be allowed to continue in the building, permanently as a tenant. There is not, even a convincing oral evidence from the side of the respondent, despite his taller claims in the statement of objections. The respondent would limit his claim in evidence to Rs.3 lakhs towards cost of construction of the building and RCR. N0. 209/03 -12- Rs.5 lakhs towards the cost of improving the building. Receipts, Exhibit A1 series were produced by the respondent. The authenticity of which are disputed by the revision petitioners- landlords. The respondent is yet to be proved those receipts in the light of the objection taken, regarding their authenticity. Even assuming that those receipts are genuine and issued by the previous landlord against amounts advanced by the respondent towards cost of construction of the building., then also those receipts cover a total amount of Rs.70,000.-. If the respondent is able to prove that those receipts were issued by the original landlord against payment made by him towards cost of construction of the building as deposits towards a future rental arrangement ( the receipts describe the amounts as towards rent advance or rent deposit) perhaps those receipts may offer a serious defect to the landlord's case for eviction, may be a valid defence on the ground under Section 11(2)(b). 10. The order of the Rent Control Court was attempted to be supported by the revision petitioners before the Rent Control Appellate Authority relying on the judgment of the Division Bench RCR. N0. 209/03 -13- of this Court in Allied Traders v. Cochin Oil Merchants Association (2002(1) KLT 886). Obviously, the above decision was cited by the revision petitioners before the appellate authority to answer an argument which is seen to have been raised before that authority by the respondent to the effect that since there is a clause in the rental arrangement that monthly rent will stand enhanced every three years by 5% per annum, the tenancy is a perpetual one and that if the tenant pays increased rent every year by 5% of the previous year's rent, he is entitled to continue as tenant permanently. The Appellate Authority would have read that judgment has relied only that the parties are entitled to contract out each of the provisions of the BRC Act and is not applicable to the present case since the decision does not say that a permanent tenancy was raised by the tenant and the court did not consider the question of permanent tenancy in the context of the indefinite continuance of tenancy evident from the document which was the subject-matter of that case. According to the learned Appellate Authority, the judgment in Allied Traders case was not opposite to the facts which obtained RCR. N0. 209/03 -14- in the present case. Having examined the ratio of the judgment in Allied Traders case, we are unable to subscribe to the view of the learned Appellate Authority that the observations in that judgment cannot have any application to the facts of this case. Their Lordships in that judgment noticed that the lease deed which was the subject matter of that case had given an option to the tenant to continue the tenancy on condition that the monthly rent will stand increased by 10% every three years. Construing such a clause, Their Lordships have noticed that the clause will not take away the statutory right of the landlord to apply for and obtain eviction on one of the grounds existing under Section 11, when the claim of permanent tenancy is said to be supported on the basis of the clauses in the lease deed to the effect that the rent will stand enhanced every three years. The decision of the above Division Bench will certainly stand against the respondent. 11. Now, we shall deal with the respondent's case of permanent tenancy in view of his investing substantial amounts towards improving the building with the consent of the landlord. The Rent Control Court has understood the above claim of the RCR. N0. 209/03 -15- respondent to be a claim for value of improvements. Mr.Sheshadri would argue that the claim is not a claim for value of improvements, but instead, the claim is only that in view of the very valuable improvements effected by the respondent with the consent of the landlords, the respondent should be allowed to hold the building permanently or at least for a period of 30 years. As we have already noticed, any claim to hold the building for a period of 30 years will not amount to a claim for permanent tenancy as envisaged by the second proviso to Section 11(1). At best, it may amount to a contention referable to Section 11(9). Such a contention will not be a countenance even for a moment in the absence of any pleadings. The contention, in our opinion, was rightly construed by the learned Rent Control Court to be one for value of improvements or to the effect that unless and until the amounts expended towards improving the building is paid back, the landlord is not entitled to seek eviction. Justice K.Sadasivan had occasion to deal with the power of the Rent Control Court to award value of improvements effected by the tenant and also to deal generally with the claim based on RCR. N0. 209/03 -16- improvements allegedly effected by the tenant to the building in question with the consent of the landlord. In Sivarama Menon v. Raghavan (1972 KLT 188) His Lordship would rely on the judgment of the Travancore-Cochin High Court in Gomathi Amma v. Chinnakkannu Pillai (1954 KLT 278), judgment of this Court in Appukkuttan Pillai v. Thiruvadinathapillai (1958 KLT 440) and also the judgment of the Mysore High Court in Narayana Shenoy v Venkatesha Shenoy (1966(2) Mys.L.J. 133) and also the judgment of the Supreme Court in Narayana Shenoy v. Venkatesha Shenoy (AIR 1971 SC 942) and held that: “Rent Control Court is not expected to go into the question of value of improvements. It is not a matter falling within the jurisdiction of the Rent Control Court. The Act is a complete code on the rights and liabilities of the landlord and tenant in respect of matters falling within the purview of landlord and tenant in respect of the building and it is not permissible for a landlord or tenant in cases RCR. N0. 209/03 -17- governed by the Act to fall upon the provisions of the Transfer of Property Act or the contract of tenancy or other extraneous circumstances”. The case decided in 1972 KLT 188 was regarding the claim of permanent tenancy. In fact, the claim of tenancy raised in that case was specifically to the effect that unless value of the improvements effected by the tenant in that case amounting to Rs.40,000/- is paid, the landlord is not entitled to evict him and in that case also a prayer was made by the tenant that the bona fides of the claim of permanent tenancy was raised preliminarily. The Rent Control Court in that case held that the claim of permanent tenancy which significantly was based only on the claim of value of improvements was bona fide and dismissed the RCP. 12. The Appellate Authority (at that time Sub Judge) reversed the order of the Rent Control Court and held that the claim of permanent tenancy was not bona fide. But in revision under section 20 the District Judge set aside the order of the Appellate Authority and restored that of the Rent Control Court. RCR. N0. 209/03 -18- The judgment of Justice Sadasivan was rendered in the civil revision petition directed against the order of the District Judge. Allowing the C.R.P. this Court held that a tenant resisting an action for eviction under the Rent Control Act is not entitled to put forward the claim for value of improvements and that the Rent Control Court is not empowered to adjudicate such a matter as it is not within the jurisdiction of that Court. This Court approved the view taken by the Mysore High Court in Narayana Shenoy v. Venkatesha Shenoy, (1966(2) M.L.J. 133) that the right to get compensation is an independent right. It could be claimed by means of independent proceedings. Pleadings apart, my attention has not been invited to any provision in the Act under which the Court can direct payment of compensation for a tenant before ordering his eviction. While asking for the petitioner's eviction the respondent was enforcing a statutory right of his. The relief prayed for by him could be refused only on one or the other of the grounds found in the Act. As mentioned earlier, the tenant if he has a right to compensation could enforce the same in an appropriate proceeding. But he cannot make RCR. N0. 209/03 -19- that a ground to resist the eviction proceeding against him. The above view of the Mysore High Court which has been approved by the Supreme Court in Narayana Shenoy v. Venkatesha Shenoy, AIR 1971 SC 942 which was an appeal against the judgment of the Mysore High Court. It is held by this court in Sivarama Menon v. Raghavan, 1972 K.L.T. 188 that a contention based on value of improvements will not amount to a claim of permanent tenancy and that in any view of the matter the claim for value of improvements is one to be adjudicated in the civil court and not before the Rent Controller. We are in agreement with the view expressed by Sadasivan, J. in Sivarama Menon's case. 13. We find that in this case the Rent Control Court has given fairly good reasons to support its view that the claim of permanent tenancy does not arise in this case, including the reason that admittedly the tenancy is governed by an unregistered lease deed. On going through the order of the Rent Control Appellate Authority we find that the said authority has not bothered to examine the soundness and correctness of the reasoning of the Rent Control Court. After referring to the RCR. N0. 209/03 -20- arguments on either side, the Appellate Authority refers to the judgment in 2002(1) KLT 410 and states that the said decision does not relate to claim of permanent tenancy and does not consider the question whether indefinite continuance of tenancy offends the object of the legislation. The Appellate Authority assumes