In the High Court of Judicature at Madras Dated: 05.10.2010 Coram: The Honourable Mr. Justice R.SUBBIAH Second Appeal No.70 of 2002 and C.M.P.Nos.3565 of 2007 and 418 of 2008 M/s.Hindustan Petroleum Corporation Limited, rep.by its Senior General Manager, Chennai-600 008. ..Appellant/Defendant ..vs.. 1. Angammal (deceased) 2. Rajakumari Pasupathi 3. Chandra Sundaraj 4. D.Ramachandran 5. D.Padmanabhan 6. D.Dandapani 7. D.Neelothbalambal 8. D.Sundaram 9. D.Vijayalakshmi R3 to R9 are brought on record as LRs.of the deceased R1 vide order of Court dt.22.01.2004 made in CMP No.5183/2003. ..Respondents/Plaintiff Second Appeal under section 100 of Civil Procedure Code, filed against the judgment and decree dated 08.10.2001 in A.S.No.4 of 2001 on the file of Additional District Court, Nagapattinam, reversing the judgment and decree dated 02.08.2000 in O.S.No.238 of 1998 on the file of Principal Sub Court, Nagapattinam. For Appellant : Mr.M.Vijayan for M/s.King & Partridge For Respondent : Mr.S.Sadasivan for R2 Mr.N.Senthilkumar for R3,R6 & R9 Ms.R.T.Shyamala for R5 & R8 No appearance for R4 & R7 https://hcservices.ecourts.gov.in/hcservices/ JUDGMENT The defendant is the appellant, who has filed this Second Appeal aggrieved over the decree and judgment dated 08.10.2001 passed by the learned Additional District Judge, Nagapattinam, in A.S.No.4 of 2001, whereby the decree and judgment dated 02.08.2000 passed by the learned Principal Subordinate Judge, Nagapattinam, in O.S.No.238 of 1998 were set aside. 2. The deceased 1st respondent and the 2nd respondent herein as the plaintiffs filed O.S.No.238 of 1998 on the file of the Principal Sub Court, Nagapattinam, against the appellant herein (defendant therein) to quit and deliver vacant possession of the schedule mentioned property to the plaintiffs and also to direct the defendant to pay damages for use and occupation to the plaintiffs with regard to the suit property at the rate of Rs.5,000/- per month from the date of legal notice dated 04.11.1995 till the date of plaint and thereafter, at the rate of Rs.15,000/- per month from the date of plaint till the date of handing over the vacant possession of the schedule mentioned property to the plaintiffs. 3. The facts of the case in a nutshell are as follows: One late Dakshinamoorthy, the husband of the 1st plaintiff and the father of the 2nd plaintiff, was the absolute owner of the land holdings measuring to an extent of 1061 sq.yards situated in Taluk Survey Nos.2849 to 2852 in Ward No.II, Block No.47, Thiruvarur Town, which is the suit property. He had constructed a petrol bunk service station in a portion of the said land holding, accepting the request made by M/s.Caltex (India) Limited, and executed a registered Deed of Lease with regard to the schedule mentioned property on 23.10.1967 in favour of M/s.Caltex (India) Limited on a rent of Rs.175/- per month. Subsequently, the Government of India promulgated an ordinance on 30.12.1976, in terms of which, a Notification was issued; under which, the said Caltex (India) Limited, the predecessor-in-interest of the defendant, was taken over by the Government of India and vested in a company named M/s.Caltex Oil Refinining (India) Limited, which was subsequently amalgamated with M/s.Hindustan Petroleum Corporation Limited, the defendant herein, by virtue of the notification dated 09.05.1978 issued by the Government of India. As per the lease deed dated 23.10.1967, the lease was for a period of ten years with an option of renewal for a further period of 5 years from the date of expiry of the original lease on a written request made by the lessee and under clause 3(G) of the lease deed, the lessee was permitted to have the benefit of three further renewals. By virtue of the terms of the lease deed, the period of lease had expired on 22.10.1977, but the defendant's predecessor-in-interest, namely, M/s.Caltex (India) Limited, by a letter dated 30.08.1976 had exercised its option for the renewal for further period of five years. Since the exercise of option was not in conformithy with clause 3(G) of the Lease deed, the leasehold rights of the defendant https://hcservices.ecourts.gov.in/hcservices/ in the schedule mentioned property have been determined by efflux of time, under law. While so, the defendant had filed a suit in O.S.No.73 of 1980 before the District Munsif Court, Thiruvarur, for a direction to renew the period of lease granted earlier, for a period of five years from 01.02.1977. In the meantime, the original owner had settled the suit property in favour of the plaintiffs by way of two registered settlement deeds dated 16.01.1981 and 17.01.1981. The defendant had filed another suit in O.S.No.275 of 1984 before the District Munsif Court, Thiruvarur against the original lessor for a direction to renew the period of lease for five years from 01.02.1982. In the meantime, the original owner died on 27.11.1985 and the said suits were dismissed by the trial court on 31.03.1988. Further, the defendant had instituted another suit in O.S.No.305 of 1988 in the Court of the District Munsif, Thiruvarur, against the plaintiffs for a direction to renew the period of lease for a further period of five years from 01.02.1987 and the same was decreed on 06.04.1990. Aggrieved over the same, the plaintiffs filed an appeal in A.S.No.349 of 1992 before the Sub Court, Nagapattinam, whereunder the appeal was allowed and the suit was dismissed; against which, no appeal was preferred by the defendant. Thereafter, the plaintiffs sent a legal notice dated 04.11.1995 to the defendant terminating their tenancy with regard to the schedule mentioned premises and calling upon them to quit and deliver vacant possession of the same on or before 01.01.1996; for which, the defendant sent a reply dated 30.01.1996 stating that the defendant, being the statutory tenant, was entitled to the protection under the the relevant rent legislation. Since the defendant did not comply with the demand made by the plaintiffs, the present suit has been filed for the reliefs stated supra. 4. Resisting the case of the plaintiffs, the defendant filed a written statement stating that what has been demised to the defendant by the original owner ,was the vacant land together with building and as such, the civil court has no jurisdiction to try the present suit and the remedy of the plaintiffs was to approach the Rent Control Court for eviction. Moreover, as per the terms of the lease deed, the defendant had exercised its first option for renewal of the lease for a period from 01.02.1977 to 31.08.1982. Therefore, the defendant was entitled to further statutory renewal in terms of section 5(2) of the Act 17/77, through which M/s.Caltex Oil Refining (India) Limited was amalgamated with the defendant and the plaintiffs were not entitled to get vacant possession as well as the damages. 5. On the said pleadings, the trial court framed three issues and on the side of the plaintiffs, the 2nd plaintiff examined herself as P.W.1 and marked Exs.A-1 to A-9 and on the side of the defendant, one Sachithanandam, a Senior Sales Officer of the defendant was examined as D.W.1; but no document was marked on their side. The trial court, on a consideration of the evidence, both oral and documentary, dismissed the suit, holding that the defendant was entitled to the statutory renewal of further ten years as per section https://hcservices.ecourts.gov.in/hcservices/ 7(3) of the Act 17/77 on the expiry of the original lease period and moreover, the defendant had exercised the statutory renewal by a letter to the plaintiffs to extend the lease period till 2007. Aggrieved over the same, the defendant filed A.S.No.4 of 2001 before the Additional District Court, Nagapattinam and the appellate court allowed the appeal and decreed the suit by directing the defendant to pay a sum of Rs.5,000/- as damages from the date of notice dated 04.11.1995 till the date of handing over vacant possession of the subject property and also granted three months' time to hand over vacant possession. Against the said judgment, the defendant filed the present second appeal. Pending second appeal, the 1st plaintiff died and, as such, her legal representatives were impleaded as respondents 3 to 9. 6. At the time of admission of the second appeal, this Court framed the following substantial question of law for consideration: (1) Can the lower appellate Court allow the appeal though has given a finding that plaintiffs have not proved to be the owners of the premises in view of non-production of the alleged settlement deed ? (2) Is not the appellant entitled to raise a material question of law and fact relating to the ownership of the subject premises due to the subsequent developments, which would go to the root of the matter, at this stage of second appeal? (3) Whether under the provisions of the Caltex Acquisition of Shares of Caltex Oil Refining (India) Limited and of the undertakings in India of Caltex (India) Limited Act, 1977 (17 of 1977) the appellant is entitled to the renewal of the lease on the same terms and conditions by way of a statutory right ? (4) Whether to exercise such statutory right of renewal under the said Act, the registered Lease Deed is required or mandatory ? (5) Whether admittedly there is a conflict of decision by the Honourable Judges of the Madras High Court, whether the Appellate Court can take a decision one way or the other according to its discretion ? (6) When there are several decisions of the Bench of this Honourable Court, where it was held or observed either direct, or by way of observation that under the Acquisition Law, the first renewal is a statutory renewal and therefore is not the question of whether the Lease Deed is registered or not does not apply ? (7) Does not the rent control court has jurisdiction to entertain the proceedings in view of lease being land with building and in consequence thereof does not a lower court lack jurisdiction ? (8) Has not the lower appellate Court misinterpreted https://hcservices.ecourts.gov.in/hcservices/ the ratio laid down in AIR 2001 Madras 1999 ? (9) Is not the appellant entitled to benefit as per the ratio laid down in 1999(3) MLJ 476 and 1999(4) SCC 450 ? (10) Does the Central Government alone has the right to invoke provisions of the Act 17 of 1977 or does the appellant entitled to the same having succeeded to the benefits under the Act ? (11) Is not the possession of statutory tenant under a special enactment, Act 17/1977, after the expiry of contractual lease period, legal and valid ? (12) Whether the statutory tenant under a special enactment, Act 17/1977, is liable to pay damages for use and occupation ? (13) The issue is of very great public importance as it affects the rights of public undertakings created by the parliament and it is a far reaching question of law ? 7. Learned counsel for the appellant/defendant submitted that the subject lease relates to the land with building and therefore, the civil court has no jurisdiction to try the suit and, as such, the question of jurisdiction ought to have been held in favour of the appellant and the proper forum to decide the suit is only the Rent Control Court. But the courts below have erred in coming to the conclusion that the land with building was leased out with an exercise and, therefore, it is a composite lease and as such, the civil court has jurisdiction to try the suit. Attacking the said finding, the learned counsel submitted that the said finding is not based on any legal evidence and in the absence of any positive evidence, the courts below ought to have rejected the plea of the respondents that the civil court has jurisdiction to try the suit. Moreover, respondents 1 and 2/plaintiffs had not pleaded that the lease is a composite one. Therefore, on the ground of jurisdiction, the suit ought to have been dismissed. Further, the learned counsel submitted that though the suit property was settled in favour of the plaintiffs by their predecessor-in-title, viz., Dakshinamoorthy, the settlement deeds were not produced before the courts below to substantiate their contention. The failure to produce the settlement deeds would run fatal to the very basis of the suit itself and a fraud has been played by the plaintiffs in this regard and they had not approached the Court with clean hands. As per the provisions of the Caltex (Acquisition of Shares of Caltex Oil Refining (India) Limited and of the Undertakings in India of Caltex (India) Limited) Act, 1977 (17/77), the appellant is entitled to the renewal of the original lease for a further period of 30 years, but these facts were not properly considered by the lower appellate court and under such circumstances, the appeal has to be allowed. In support of his submissions, the learned counsel relied on the decisions reported in the case of S.P.CHENGALVARAYA NAIDU (DEAD) BY LRs. ..vs.. JAGANNATH (DEAD) BY Lrs.(1994)1 SCC 1) and BHARAT PETROLEUM CORPORATION LTD., ..vs.. KESAVAN AND ANOTHER (2004) 9 SCC 772). https://hcservices.ecourts.gov.in/hcservices/ 8. Per contra, the learned counsel for the 2nd respondent/ 2nd plaintiff submitted that there is sufficient oral and documentary evidence to show that originally the petrol bunk was run by the late Dakshinamoorthy from 1955 to 1967 and he had leased out the property with all exercise, which could be evident from the schedule to the lease deed marked as Ex.A-1. Therefore, it is incorrect to state that the land and building were leased out to the appellant. Since it is a composite lease, under section 30 of the Tamil Nadu Buildings (Lease and Rent Control) Act, (in short 'the Rent Control Act'), the said property will not fall within the purview of the Rent Control Act. The learned counsel further submitted that under the Act 17/77, the appellant is entitled to the statutory renewal only for a period of 10 years, which could be evident from the written statement filed by the defendant, wherein it has been stated that they are entitled to the statutory renewal up to 2007. Since the statutory period also came to an end by 2007, the appellant is not entitled to any further renewal. The learned counsel further submitted that it is incorrect to state that the 2nd respondent and her mother had played a fraud by not producing the settlement deeds as exhibits before the trial court. In fact, the settlement deeds executed by the late Dakshinamoorthy in favour of the plaintiffs had never been a dispute before the courts below. Under such circumstances, the question of producing the settlement deeds does not arise. In support of the above contentions, the learned counsel relied on the decisions reported in the case of JAI SINGH K.V. ..vs.. C.R.GOVINDASWAMY CHETTIAR (DIED) AND OTHERS (1996-2-L.W.677), H.P.C.LTD., ..vs.. DOLLY DAS (1999) 4 SCC 450) and DEPOT SUPDT., H.P.C.LTD., ..vs.. KOLHAPUR AGRICULTURAL MARKET COMMITTEE, KOLHAPUR (2007) 6 SCC 159). 9. Heard the learned counsel for the parties and perused the materials available on record. 10. In view of the submissions made by the learned counsel on either side, the questions that arise for consideration are, (1) Whether the suit ought to have been dismissed by the trial court for want of jurisdiction? (2) Whether the appellant/defendant is entitled to get any further renewal of lease? 11. It is the case of the appellant/defendant that the property leased out by the original owner to their predecessor-in-interest was the building with land and hence, the subject property will come within the purview of the Rent Control Act and under such circumstances, the Civil Court has no jurisdiction. Per contra, it is the case of the 2nd respondent/2nd plaintiff that the said property was leased out to the appellant's predecessor-in-interest, viz., M/s.Caltex (India) Limited with all exercise. Therefore, the provisions of the Rent Control Act will not apply to the present case. On a perusal of the schedule to the lease deed marked as Ex.A- 1, I find that the first schedule relates to the description of https://hcservices.ecourts.gov.in/hcservices/ the subject property and the second schedule reads as follows: (1) Brick masonry kiosk with store-room (15 ft.6 in.x11 ft.6 in.) with 3' walkway all round with built-in structures and other appurtenances. (2) 4' high compound wall-308 R.ft.or thereabouts. (3) 4' dia.masonry well (4) Covered drain 70 ft.6 in.and open drain 20 ft. (5) Land improvements and driveway waterbound macadam. (6) Service/Electric connection and fittings". 12. From the above, the second schedule would show that the property was leased out with exercise and all fixtures, which are necessary to run the petrol bunk. Moreover, it is the case of the 2nd respondent that originally her father Dakshminamoorthy was running the petrol bunk from 1955 to 1967 in the suit property and thereafter, he leased out the property with all fixtures and exercise to the appellant's predecessor-in-interest in 1967. Therefore, these facts would show that the lease is not in respect of the land and building and on the other hand, it is a lease of land and building with other fixtures. At this stage, it would be relevant to refer to the illustrations 2 and 3 given under section 30 of the Rent Control Act, which reads hereunder: Illustration (2):Where the lease is of land and building together with fixtures, fittings, cinematograph talkie equipments, machinery and other articles the Act does not apply to such building. Illustration (3):Where a hotel building together with the furniture, machinery and other articles necessary for the running of hotel business is leased and the tenant is to run the hotel business in such building, the Act does not apply to such building. From the said illustrations, it is clear that the subject property will not come within the purview of the Rent Control Act. In this regard, it is relevant to refer to the judgment reported in 1996-2- L.W.677 (supra), wherein the relevant paragraph is extracted hereunder: "5. ... Thus, the terms and conditions stipulated in the various agreements referred to and entered into between the parties to this action clearly go to show that the intention of the parties is to run the theatre as a going concern with the furnitures, fittings, etc., as originally provided by the lessors and subsequently altered and provided from time to time by the lessees. As pointed out by a Division Bench of https://hcservices.ecourts.gov.in/hcservices/ this Court in 86 L.W.65, the question of intention of the parties will become relevant only if the terms of the transaction are not clear. In this case, the terms are very clear, simple and unambiguous and therefore, the intention also can be clearly seen and the purpose for which the building was taken is to run the business of the theatre with the fixtures, fittings, etc. There can be no doubt in holding that the intention of the parties was to enter into a transaction of lease of a going concern of theatre. So, we have no hesitation in holding that Ex.A-1 is a composite lease. We answer the point accordingly and in favour of the lessors and against the lessees". 13. In the instant case also, the terms and conditions stipulated in the lease deed would show that the intention of the parties was only to run a petrol bunk and the subject property was leased out with all exercise and fixtures which could be evident from the schedule to the lease deed. Therefore, it is very clear that it is a composite lease and the Rent Controller has no jurisdiction to try the suit. Moreover, I find that D.W.1 himself had admitted in his cross examination that the property was leased out with petrol and diesel tank and pumps, as follows: "Fj;jif gj;jpuk; ehd; ghh;j;J ,Uf;fpnwd;/ rh;tP!; !;nlc&d; vd;gJ bgl;nuhy; gk;g[. fl;olk;. nl';f; kw;Wk; cgfuz';fs; nrh;e;jitfs; MFk;/ th/rh/M/1d;go fhy;blf;!; vd;w epWtdj;jpd; bgahpy; rh;tP!; !;nlc&dhf elj;j v';fSf;F thliff;F tplg;gl;lJ///@ Considering the said evidence of D.W.1 and also the schedule to the lease deed, I do not find any substance in the submission made by the learned counsel for the appellant that the subject property leased out was only the land and building and therefore, the civil court has no jurisdiction. 14. Now I pass on to the arguments made by the learned counsel for the 2nd respondent. In this context, I would like to make an appropriate and fitting reference to the decision rendered by the Supreme Court in Bharath Petroleum Corporation Ltd., ..vs.. Maddula Ratnavalli and Others reported in (2007)6 SCC p.81, wherein the Apex Court has elaborately examined and interpreted the legal questions of law relating to renewal of lease/tenancy in the background of sections 5(2) and 7(3) of the Burmah Shell (Acquisition of Undertakings in India) Act, 1976 vis-a-vis the Transfer of property Act 1882. Subsequent to the above Act of 1976, the Caltex (Acquisition of Shares of Caltex Oil Refining (India) Limited and of the Undertakings in India of Caltex (India) Limited Act, 1977, was enacted. The principle of both the aforesaid Acts is same. 15. Now, for the purpose of clear understanding, the relevant https://hcservices.ecourts.gov.in/hcservices/ sections are now replicated hereunder. Sections 5(2) and 7(3) of Burmah Shell (Acquisition of Undertakings in India) Act 1976, reads as follows: "5.(2) On the expiry of the term of any lease or tenancy referred to in sub-section (1), such lease or tenancy shall, if so desired by the Central Government, be renewed on the same terms and conditions on which the lease or tenancy was held by Burmah Shell immediately before the appointed day". 7.(3) "The provisions of sub-section (2) of Section 5 shall apply to a lease or tenancy, which vests in a Government company as they apply to a lease or tenancy vested in a government company, as they apply to a lease or tenancy vested in the Central Government and reference therein to the 'Central Government' shall be construed as a reference to the government company". 16. Now, turning to the Caltex Act, 1977, it is pertinent to refer to section 7(3) of the said Act, which reads as follows: "7. Special provisions as to certain rights and interests held by Caltex (India) before the appointed day:- (3) On the expiry of the term of any lease, tenancy or arrangement referred to in sub-section (1) or sub-section (2), such lease or tenancy or arrangement shall, if so desired by the Central Government, be renewed or continued, so far as may be, on the same terms and conditions on which the lease or tenancy or arrangement was originally granted or entered in toto". When the aforementioned sections of both the Acts are examined, keeping them in juxtaposition, those provisions are more or less the same except with some slight variations; however, the intendment and the basic principles of those seem to be the same. Therefore, I take the interpretation of those provisions of sections 5(2) and 7(3) of the Act ,1976 in relation to the Section 7(3) of the Act, 17 of 1977. 17. Now the question that arises for consideration in the present appeal is more or less similar to the question that arose before the Supreme Court in (2007)6 SCC 81 (MADDULA RATNAVALLI's case). The issue to be decided in KOLHAPUR AGRICULTURAL MARKET COMMITTEE's case (2007) 6 SCC 159) was whether the appellants were entitled to have automatic renewal or continuance of the lease in the absence of any material showing such desire on the part of the Central Government. Therefore in the backdrop of the interpretation of the Statues, I shall approach the facts of the present case and examine the submissions and the counter submissions made by the learned counsel appearing on either side. 18. It could be seen from the facts of the case on hand that there is no automatic renewal and there can be renewal only if it is so desired by the Central Government. There is no material placed before the courts below that there was any desire in that regard by the Central Government. In fact, the appellant Corporation itself had https://hcservices.ecourts.gov.in/hcservices/ exercised the statutory option only up to 2007, which is evident from the written statement, as follows: "Thereafter the