IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN TUESDAY, THE 27TH OCTOBER 2009 / 5TH KARTHIKA 1931 RCRev..No. 243 of 2009() ------------------------ RCA.33/2009 OF RENT CONTROL APPELLATE AUTHORITY, ERNAKULAM RCP.96/2006 OF RENT CONTROL COURT,ERNAKULAM .................... REVISION PETITIONER/APPELLANT/RESPONDENT ------------------------------------------------------------ SOJAN JOSEPH, S/O.IYPE, AGED 45 YEARS, VALLAMTTATHIL HOUSE, THOTTAKKARA KARA, ARAKKUZHA VILLGE, MUVATTUPUZHA TALUK, ERNAKULAM DISTRICT. BY ADV. SRI.GEORGE KARITHANAM VARGHESE SRI.JOSEPH A.VADAKKEL SRI.V.J.JOHN SRI.JOSE KURIAKOSE (VILANGATTIL) RESPONDENT(S): RESPONDENT/PETITIONER ------------------------------------ 1. SOUTHERN FISHERIES CORPORATION CRYSTAL PALACE COMPLEX,BANERJEE ROAD,KOCHI-35,PARTNERSHIP FIRM REP.BY ITS PARTNERS DR.E.T.KURIAKOSE,S/O.THOMMAN, AGED 81 YEARS,NETHRA BHAVAN, KARAKKATTU ROAD, ERNAKULAM DISTRICT 2. DR.THOMAS KURIAKOSE, S/O.E.T.KURIAKOSE, AGED 48 YEARSM NETHRA BHAVAN, KARAKKATTU ROAD, ERNAKULAM DISTRICT. BY ADV. SRI.K.C.CHARLES THIS RENT CONTROL REVISION HAVING COME UP FOR ADMISSION ON 27/10/2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: PIUS C. KURIAKOSE & K.SURENDRA MOHAN, JJ. ------------------------------------------ RCR. No. 243 of 2009 ------------------------------------------- Dated this the 27th day of October, 2009 O R D E R Pius C.Kuriakose, J. In this revision under section 20 of Act 2 of 1965 the tenant impugns the judgment of the Rent Control Appellate Authority confirming the order of eviction passed by the Rent Control Court on the ground of arrears of rent (Section 11(2)(b), bona fide need for own occupation (Section 11(3), user of the building in such a manner as to reduce the value and utility of the building materially and permanently (Section 11(4)(2) and cessation of occupation (Section 11 (4)(v). 2. The subject matter of the rent control proceedings is portion of a building by name Crystal Palace situated on the Banerjee Road within the area of Cochin Corporation near to the High Court Building. The extent of the tenanted premises, according to the landlord, comes to 15170 sq. ft. RCR. 243/09 - 2 - consisting of hotel reception area in the ground floor, 8 bath attached double rooms and one mini air conditioned conference hall converted into rooms by the tenant, thus 11 rooms in the second floor, full carpet area in the third floor and full carpet area including the pent house in the fourth floor. The landlords' case is that on a monthly rental of Rs.42,000/- the premises were let out to the tenant in the month of June 2005. Rent is in arrears from the month of January 2006 onwards. Ext.A9 notice was issued demanding arrears of rent as well as surrender of the premises on the ground of own occupation. The tenant sent A6 reply wherein it is contended that the contract rent is not Rs.42,000/- but is only Rs.4200/-. The tenant contended further that a sum of Rs.2 lakhs was given as security advance returnable upon the tenant vacating the building. The allegation that rent is due since January 2006 is admitted but it is contended that despite tender, RCR. 243/09 - 3 - Sri.E.T.Kuriakose, Managing Partner of the landlord firm refused to accept the same. The further contention raised by the tenant in the reply was that Rs.30 lakhs was expended by the tenant for renovating the building with permission and concurrence of the landlord. The bonafides of the need projected in the notice which was for conduct of hotel business itself by the landlord firm was denied. The allegation that due to negligent user of the building the value and utility of the building has become deteriorated was denied and it was contended that the present condition of the building is far better than it was at the time of letting. It was also contended that the tenant had expended a sum of Rs.1,52,000/- towards expected charges for repairing the leakage of the roof of the building which was promised to be attended to by the landlord though the promise was never kept. Apart from the grounds already stated in the lawyer notice while the RCP was filed, additional ground of RCR. 243/09 - 4 - cessation of occupation was also raised. It was alleged that the tenant was not doing any business in the building and hence ceased to occupy the building without any reasonable cause from the month of September 2005 onwards. Detailed averments were incorporated in the RCP regarding the material alterations made by the tenant to the building resulting in reduction of the value and utility of the building permanently and materially. The rent control petition was resisted by the tenant who reiterated the various contentions already taken in the reply notice Ext.A6. Apart from that, a fresh contention was raised that the petitioner in the RCP is not the title holder of the building and is not the real owner. It was also contended that the lease agreement was initially for a period of 9 years and 11 months containing a clause for renewal giving right to the tenant to sublet during the above period of 9 years and 11 months. While denying the need under sub-section (3) of RCR. 243/09 - 5 - Section 11 it was contended that the landlord firm has no experience in conducting hotel business and that the landlord owned other buildings attracting the first proviso to sub-section (3) of Section 11. The allegations regarding cessation of occupation were also denied. The evidence at trial by the Rent Control Court consisted of the oral evidence of PW1, one of the partners of the landlord firm, the documents Exts.A1 to A8, commission report Ext.C1 and sketch C1(a), apart from documents B1 to B6 series and the oral evidence of the tenant as RW1. The Rent Control Court on evaluating the evidence would find that all the eviction grounds included in the RCP stood established and accordingly passed order of eviction on all grounds. The Appellate Authority formulated the requisite points for consideration as follows: 1. Whether the denial of title of the landlord raised by the tenant was a bonafide one and the trial court has not considered the same on merit? RCR. 243/09 - 6 - 2. Whether the findings of the trial court that the rate of monthly rent was Rs.42,000/- is an erroneous one? 3. Had not any alterations made in the building in the nature of reducing its utility and value? 4. Whether the alterations are in the nature of maintenance work and it has been done with the permission and consent of the landlord? 5. Whether the findings of cessation of occupation of the building is an erroneous one? 6. Whether the plea of bonafide need of the building raised was as a ruse to evict the tenant? 7. Whether the petitioner is in possession of buildings sufficient to occupy and to meet the needs? 8. Whether any interference is called for by this court in the order passed by the trial court? The Appellate Authority re-apprised the evidence and would answer all the points against the tenant thus virtually confirming all the conclusions arrived at by the Rent Control Court. Accordingly the appeal was dismissed and the order of eviction was confirmed. RCR. 243/09 - 7 - 2. In this revision under Section 20 the tenant impugns the eviction orders on various grounds and we have heard the submissions of Sri.Jose Kuriakose, learned counsel for the revision petitioner and also those of Sri.K.C.Charles, learned counsel for the respondent who had lodged a caveat. Very extensive submissions were addressed before us by Sri.Jose Kuriakose, learned counsel for the revision petitioner. Since we found it necessary to have a perusal of the records for appreciating the arguments, we brought the records down from the court below and perused those items of evidence necessary for appreciating the submissions addressed before us by the learned counsel. Mr.Jose Kuriakose submitted that the finding of the courts below that Rs.42,000/- was the contract rent payable by the revision petitioner was entered in the absence of proper evidence. The original of the rent deed admittedly executed was not produced. Copies of rent RCR. 243/09 - 8 - receipts were also not produced. When the attention of the learned counsel was drawn to the improbability of extensive commercial area being let out to the tenant for so low a rent as the tenant, says the learned counsel would submit that agreement that the rent will be only Rs.4200/- was arrived at between the parties considering the fact that the revision petitioner invested the huge sum of Rs.30 lakhs for furnishing and renovating the building so as to make it suitable for conduct of hotel business. The learned counsel submitted that I.A.543/09 was filed by the revision petitioner for compelling the production of the annual report and balance sheet of Crystal Palace for the years 2004-2008 for the purpose of proving that the petitioner in the RCP is not the landlord entitled to receive rent and that rent was being paid to Hotel Crystal Palace. The Rent Control Court dismissed the above I.A. The Appellate Authority also did not interfere with that order and permit production of those RCR. 243/09 - 9 - relevant documents. Counsel submitted that it is solely relying upon Ext.A4 judgment passed by a competent civil court that the learned Rent Controller and the Appellate Authority arrived at the conclusion that the contract rent is Rs.42,000/-. Counsel submitted that A4 had not attained finality but is pending before this Court in appeal. Counsel submitted that the finding that the value and utility of the building has been materially and permanently reduced due to the alterations effected in the building was incorrect. The alterations were made with the concurrence of the landlord and under the very eyes of the landlord. These alterations were necessary for facilitating the conduct of hotel/lodging house business. On account of these alterations the value of the building has gone up and utility of the building as a building for conducting a hotel business has also gone up. The learned counsel submitted that it is not in dispute that going by the terms of the lease deed admittedly executed in RCR. 243/09 - 10 - respect of the tenancy a period of 9 years and 11 months had been provided as duration of the lease. That being so, the rent control petition should have been found to be barred by virtue of sub-section (9) of Section 11. The learned counsel submitted that the finding of the courts below that the tenant is not entitled to the protection of the second proviso to subsection (3) was clearly erroneous. Sufficient opportunity was at any rate, not granted to the revision petitioner to prove his eligibility for the benefit of the second proviso to sub-section (3). Counsel submitted that the finding on cessation of occupation was also wrong. The advocate commissioner noticed remnants of food consumed by the inmates of hotel which circumstance strongly indicated that the allegation of cessation of occupation is incorrect. 3. All the submissions of Mr.Jose Kuriakose were very stiffly opposed by Mr.K.C.Charles, learned counsel for the RCR. 243/09 - 11 - caveator landlord. Mr. Charles would support the judgment of the Rent Control Court and the Appellate Authority on the various reasons stated in those judgments. We have very anxiously considered the rival submissions addressed before us by the learned counsel in the light of the rival pleadings raised by the parties before the Rent Control Court. We have made a quick survey of the evidence adduced before the Rent Control Court to the extent necessary for appreciating the rival submissions. 4. The jurisdiction under Section 20 of Act 2 of 1965 conferred on this Court is a revisional jurisdiction and this court is not expected ordinarily to reappraise the evidence and substitute conclusions of fact entered by this court for those conclusions entered by the Rent Control Court and the Appellate Authority. Under Section 20 this court is to be concerned only with the legality, regularity and propriety of the decisions taken by the Appellate Authority which under RCR. 243/09 - 12 - the statutory scheme is the final court on facts. The expression “propriety” is of course a wide term and while examining the propriety of the judgment of the Rent Control Appellate Authority this court will be justified to a certain extent in examining the correctness of the factual findings entered by that authority – Whether those findings are founded on legal evidence or not? We are of the view that there is no warrant for invocation of the revisional jurisdiction for correcting the findings entered by the Appellate Authority in the context of the grounds of cessation of occupation, bona fide need for own occupation (including the second proviso to sub-section (3) of Section 11) and user of the building in such a manner as to reduce utility and value of the building. However, when it comes to the ground of eviction passed under Section 11(2)(b) what we notice is that there is serious controversy between the parties as to what was the agreed contract rent, whether it RCR. 243/09 - 13 - is Rs.42,000/- per mensem or Rs.4,200/- per mensem. The best evidence to prove the contract rent is the lease deed itself. The custodian of the original of the lease deed is the landlord who has not produced the same. The reasons for the landlord not producing the lease deed are not far to seek. The lease deed provides for a period of 9 years and 11 months as the duration of the lease and it appears to us the question of remittance of a very huge amount as deficit stamp duty and penalty are also likely to arise if the lease deed is put in evidence by the landlord. The question as to what is the contract rent was decided in favour of the landlord by Ext.A4 judgment by a competent civil court. It is seen from the impugned judgments of the Rent Control Court and the Appellate Authority that it is relying mainly on Ext.A4 judgment of the civil court that the authorities below found that the contract rent is Rs.42,000/-. A4 has not become final. It has been appealed against and the appeal RCR. 243/09 - 14 - is pending before this Court. We are therefore of the view that the order of eviction passed under Section 11(2)(b) on the basis of the finding that the contract rent is Rs.42,000/- and not Rs.4,200/- should be made subject to the final outcome of the regular first appeal preferred against Ext.A4 and pending before this Court. In other words, if this Court in appeal against Ext.A4 reverses the finding regarding contract rent and finds that the contract rent is Rs.4,200/- per mensem only, then the quantum of arrears payable by the revision petitioner for getting the order of eviction passed under Section 11(2)(b) will stand reduced. We are therefore inclined to alter or modify the order of eviction passed under Section 11(2)(b) by the authorities below to that extent. 5. We don't find any substance in the argument of the learned counsel for the revision petitioner that his case involves bona fide denial of the landlord's title by the tenant RCR. 243/09 - 15 - and hence parties should have been relegated to a competent civil court as required by the proviso to sub- section (1) of Section 11. Title as envisaged by subsection (1) of Section 11 of Act 2 of 1965 is not the proprietory or paramount title to the building. It, on the contrary is entitlement of the petitioner in the RCP as landlord to receive rent from the respondent in the RCP, the tenant. The petitioner in the RCP is Southern Fisheries Corporation represented by its two partners Dr.E.T.Kuriakose and Dr.Thomas Kuriakose. The respondent in the RCP is the revision petitioner Sri. Sojan Joseph. The averment in the rent control petition that the petition schedule building has been rented out by the landlord to the tenant is not in dispute. In other words, existence of a jural relationship between the parties in the RCP as landlord and tenant is not seen disputed specifically. That Southern Fisheries Corporation is a Partnership firm in existence and that RCR. 243/09 - 16 - Dr.E.T.Kuriakose and Dr. Thomas Kuriakose are its partners is also not in dispute. It is admitted that rent due from the month of January 2006 is in arrears. Answering the allegation regarding arrears of rent the contention raised is that in spite of tender of rent the Managing Partner Sri.E.T.Kuriakose refused to accept the same with ulterior motives. E.T.Kuriakose is none other than one of the two signatories to the RCP in his capacity as the partner of the landlord firm. Thus, even while the landlord's title is denied in the statement of objections itself the tenant has expressed willingness to pay rent to the landlord, viz. one of the signatories to the rent control petition. Even though the Rent Control Court did not formulate a specific point as to whether the denial of landlord's title by the tenant is bona fide we notice that the Rent Control Court also considered the question as to whether there is a landlord tenant relationship existing between the parties. The Appellate RCR. 243/09 - 17 - Authority formulated a specific point and answered the same against the tenant. As held by a Division Bench of this Court in Aboobacker v. Girija, 1995(1) KLT 553 in order that it is held that the jurisdiction of the Rent Control Court is ousted and the parties are relegated to the civil court, the Rent Control Court must be satisfied on the materials placed on record and the pleadings that in the event of the issue being relegated to the civil court the tenant who has denied the title of the landlord has a reasonably good chance of success, i.e., of his plea of denial of the landlord's title being upheld. According to us, the plea of denial of title feebly raised by the tenant does not even seriously arise and hence there is no warrant at all for upsetting the finding entered by the courts below that the denial of title if at all raised by the tenant is not bona fide. 6. It is specifically alleged in the rent control petition that the following alterations have been made by the tenant RCR. 243/09 - 18 - unauthorisedly in the building after the same was let out to him: 1. In the ground floor the wooden portions which divided the reception room into two were unauthorisedly removed. 2. In the second floor there were only 9 rooms and one mini air-conditioned conference hall. The respondent converted the mini air-conditioned conference hall into three bath attached rooms. 3. In the third floor the respondent reduced the area of the conference hall and made two new bath attached bed rooms. The tenant does not dispute these alterations allegedly made by him. But the contention he has taken is that the alterations were made in the nature of making improvements to the building. They were not in the form of reducing its utility and value. In fact the tenant claims that the present condition of the building resulting from the alterations made by him is far better than what it was at the time of letting. The Advocate Commissioner's report is to the effect that alterations as alleged in the rent control RCR. 243/09 - 19 - petition have been effected. No legal evidence has been adduced by the tenant to show that the above alterations which are material have been effected by him with the authorisation or concurrence of the landlord. Value and utility of the tenanted building has to be seen through the perceptions of the landlord. Even if the alterations have resulted in the building being more valuable from the point of view of a hotelier in as much as they have been done unauthorisedly we are in agreement with the courts below that a case under clause (ii) of sub-section (4) of Section 11 is made out. One thing is clear. The building as it exists now after the alterations cannot be put to the user to which the same could have been put to in its original condition. In that way the landlord is justified in complaining that the value and utility of his building let out to the tenant has been reduced. We therefore don't find any reason for vacating the order of eviction passed under Section 11(4) RCR. 243/09 - 20 - (ii). 7. The ground of cessation of occupation is another ground on which order of eviction is passed concurrently against the revision petitioner. We are of the view that from the evidence available in the case, the conclusion was irresistible that the tenant has ceased to occupy the building. It is true that at the time of the commissioner's visit the hotel receptionist and some members of the staff were present, but not even a single room was seen let out. The business carried on by the tenant is the business of running a hotel/lodging house. No restaurant is admittedly conducted in the petition schedule premises. The contention of the tenant was that at the time of visit by the commissioner, renovation works were being carried on and that is why there was no occupancy at all. But according to us, if as a matter of fact the tenant has actually conducted lodging house business at least for a single day by admitting RCR. 243/09 - 21 - at least one customer, the same could have been proved by the tenant by producing documents. The authorities below have rightly drawn adverse inferences against the tenant for not producing the relevant documents. Whether or not the tenant conducted lodging house business during the statutory period of six months in question as provided under clause (v) of sub-section (4) of Section 11 is an aspect which should have been proved by the tenant by producing documents at his disposal. The tenant did not produce such documents and in our opinion adverse inference was rightly drawn by the Rent Control Court and the Appellate Authority. We don't find any warrant for interfering with the findings. 8. The need projected by the landlord in the context of sub-section (3) of Section 11 was that the landlord also needs the building for conducting hotel business. Admittedly the tenant has taken the building for conducting RCR. 243/09 - 22 - hotel business. The suitability of the building for conduct of hotel business is practically admitted by the tenant. The tenant has not disputed the financial capacity of the landlord to conduct hotel business. In fact the contention of the tenant is that the partners of the landlord firm are very wealthy people. The contention of the tenant seems to be that the partners of the landlord firm do not have any experience in conducting hotel business. The explanation offered by the landlord is that they will have absolutely no difficulty in conducting hotel business by engaging competent managers and other experts. It is in the oral evidence of PW1 that his sister is an engineering graduate and she is presently residing with them without any employment. The Rent Control Court which recorded evidence of PW1 was inspired by that evidence. 9. Though a contention was taken that other buildings are available with the landlord in the landlord's possession RCR. 243/09 - 23 - and that the petition is liable to fail by virtue of first proviso to sub-section (3) of Section 11 no evidence worth the same was adduced by the tenant for substantiating the above contention. It was argued by the learned counsel for the revision petitioner that the tenant is entitled for the protection of the second proviso to sub-section (3) of Section 11 – that he is depending for his livelihood mainly for the income derived from the petition schedule building and that other buildings are not available in the locality for him to shift the business. On a perusal of the pleadings what we notice is that the