IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.BALAKRISHNAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR THURSDAY, THE 25TH OCTOBER 2007 / 3RD KARTHIKA 1929 RCRev..No. 241 of 2006() RCA.11/2005 of ADDL. RENT CONTROL APPELLAE AUTHORITY, MAVELIKKARA RCP.5/2001 of MUNSIFF COURT,KAYAMKULAM .................... PETITIONER/RESPONDENT/RESPONDENT: PUSHPADAS, S/O. RAGHAVAN, CHAITHANYA, CHERAVALLI MURI, KAYAMKULAM VILLAGE, ALAPPUZHA DIST. BY ADV. SRI.K.HARILAL RESPONDENTS: APPELLANT/PETITIONER: 1. SUKUMARA PILLAI, S/O.KESAVA PILLAI, (DIED) KAROOR SREERANGAM, CHERAVALLI MURI, KAYAMKULAM VILLAGE, ALAPPUZHA DIST. 2. RAMADEVI, W/O. SUKUMARA PILLAI, KAROOR SREERANGAM, CHERAVALLY, KAYAMKULAM, ALAPPUZHA DISTRICT, PIN - 690 502. 3. KESUNATH, S/O. SUKUMARA PILLAI, KAROOR SREERANGAM, CHERAVALLY, KAYAMKULAM, ALAPPUZHA DISTRICT, PIN - 690 502. 4. RAJESH, S/O. SUKUMARA PILLAI, KAROOR SREERANGAM, CHERAVALLY, KAYAMKULAM, ALAPPUZHA DISTRICT, PIN -690 502. 5. RENJITH, S/O. SUKUMARA PILLAI, KAROOR SREERANGAM, CHERAVALLY, KAYAMKULAM, ALAPPUZHA DISTRICT, PIN - 690 502. (ADDL. R2 TO R5 IMPLEADED AS PER ORDER DATED 25.10.2007 IN I.A. NO. 2622/2007) BY ADV. SRI.S.SREEKUMAR THIS RENT CONTROL REVISION HAVING BEEN FINALLY HEARD ON 25/10/2007, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: R.C.R. NO. 241/2006 : 2 : ORDER BALAKRISHNAN NAIR, J NO REPRESENTATION. DISMISSED. 25.10.2007 SD/- K. BALAKRISHNAN NAIR, JUDGE. SD/- T.R. RAMACHANDRAN NAIR, JUDGE. ORDER ON I.A NOS. 1620 & 2875 of 2006 IN R.C.R. NO. 241/2006 DISMISSED 25.10.2007 SD/- K. BALAKRISHNAN NAIR, JUDGE. SD/- T.R. RAMACHANDRAN NAIR, JUDGE. C.R. PIUS C.KURIAKOSE & K.SURENDRA MOHAN, JJ. ------------------------------------------- RCR No.241 of 2006 ------------------------------------------- Dated this the 9th day of March, 2010 ORDER Surendra Mohan,J. The tenant is in revision. The respondent-landlord had filed RCP No.5 of 2001 before the Rent Control Court, Kayamkulam seeking an order of eviction against the tenant alleging grounds under Section 11 (3) and 11(4)(ii) of the Kerala Buildings (Lease and Rent Control) Act, 1965, hereinafter referred to as the `Act' for short. The said petition was dismissed by the Rent Control Court. However, as per order dated 19.12.2005 in RCA No.11 of 2005, the Rent Control Appellate Authority, Mavelikkara has allowed the landlord's appeal and has ordered eviction. The above revision is filed by the tenant against the order of the Appellate Authority. During the pendency of the revision, the respondent-landlord died and his legal representatives have been impleaded as additional respondents 2 to 5. For the sake of RCR No.241/2006 2 convenience, the parties are referred to herein as the landlord and the tenant respectively. 2. The petition schedule building belongs to the landlord, having obtained title to the same under a partition deed. The building was given on rent to the tenant on a monthly rent of Rs.967/- and he is in possession of the same, doing business in fertilizers and bone powder. It is the case of the landlord that the tenant was conducting another business by name 'Das Agencies' at the Mavelikkara-Thattarambalam Junction, in a building by name 'Soma Sadanam'. The said business also is in fertilizers. The tenant has his own building close to his house and there also, he is doing business in fertilizers, bone powder etc. The landlord's son Renjith has completed his Automobile Diploma Course and he wants to start an automobile work shop and also an automobile spare parts business. For the purpose, the petition schedule building is bonafide needed by the landlord. It is RCR No.241/2006 3 further stated in the petition that an amount of Rs.80,000/- has been received from the tenant for the purpose of construction of the building, which the landlord is ready to return. However, the tenant is not willing to receive the same and to surrender vacant possession of the building. Since the tenant was not willing to receive the amount, the same has been deposited in his bank account. It is further alleged that the tenant has constructed an additional structure on the northern side of the building thereby reducing the frontage of the building. According to the landlord, the construction amounted to material alteration of the building, thereby reducing its value and utility. The landlord also pleaded that the tenant was not depending on the income from the business carried on by him in the tenanted premises for his livelihood. According to the landlord, there were other suitable buildings available in the locality for the tenant to shift his business. Therefore, he claimed RCR No.241/2006 4 eviction of the tenant on the grounds under Section 11(3) and 11(4)(ii) of the Act. 3. The petition was resisted by the tenant contending that he was not a tenant of the building. According to the tenant, he was in possession of the building and godown on the basis of an agreement dated 3.1.1992 and there is no landlord-tenant relationship between the petitioner and the respondent. According to him, the agreement was suppressed by the landlord. He contended that there was no provision in the agreement for determination of the lease and therefore, the same could only be treated as a perpetual lease from year to year. Hence, the Rent Control Act itself was not applicable to the said lease. He further alleged that the building was constructed for the purpose of the tenant, taking into account his requirements. Provision was made for the parking all types of vehicles also. The building was thus constructed as a godown and two rooms, to RCR No.241/2006 5 suit his requirements and he is conducting his business in bone powder, chemicals, insecticides and other fertilizers therein. He had given an amount of Rs.65,000/- to the landlord for construction of the building and a further amount of Rs.15,000/- for construction of the godown on condition that interest at the rate of 14.5% per annum should be paid on the amount advanced. The rent for the premises was fixed at Rs.967/-, at the rate of Rs.1.25 per sq.ft. and it was agreed to adjust the rent towards the interest payable on the advance amount. On return of the amount of Rs.80,000/- so advanced, as per the terms of the agreement, the building was to be let out to the tenant by the landlord on the fair rent, to be fixed at that time. The property tax in respect of the building was to be paid by the tenant. The tenant disputed the need of the landlord's son to start a business of his own. According to the tenant, he was already conducting a Pollution Control Centre in the room RCR No.241/2006 6 situate on the southern side of the petition schedule building. The tenant admitted that he was conducting another business by name 'Das Agencies'. But, according to him, the same was only an outlet for the business conducted by him in the petition schedule building. The said business was only seasonal. In a building, near his residential house, his wife was conducting an SSI unit over which he has no control. The case of the tenant was that he was depending on the income derived from the business conducted in the tenanted premises for his livelihood. He also contended that there were no other suitable buildings available in the locality to shift his business. The allegation that he had made additional constructions without the consent of the landlord was denied by him. According to him, it is only a temporary structure made as an extension of the main building and was intended only to protect the main building. Therefore, he prayed for dismissal of the Rent Control RCR No.241/2006 7 Petition. 4. The Rent Control Court tried the petition on the above pleadings. On the side of the landlord, Pws.1 to 6 were examined as witnesses and Exts.A1 to A11 documents were marked. The tenant examined himself as RW1 and marked Exts.B1 to B5 and B5(a) documents on his side. Exts.C1 and C2 were marked as court exhibits and Ext.X1 series documents were marked as third party exhibits. After consideration of the evidence on record, the Rent Control Court found that the petition was not maintainable in view of the terms contained in the said agreement. The court also found that the additional construction made by the tenant had not affected the value and utility of the building. With regard to the ground under Section 11 (3), the Rent Control Court found that the need alleged by the landlord was genuine and bonafide, but, the tenant was found to be entitled to the protection of the second proviso to Section 11(3) of RCR No.241/2006 8 the Act. Accordingly, the Rent Control Petition was dismissed. 5. The landlord challenged the order of the Rent Control Court before the Rent Control Appellate Authority, Mavelikkara in RCA No.11 of 2005. The Appellate Authority, on a re-appraisal of the evidence found that the Rent Control Court had seriously erred in finding that the Rent Control Petition itself was not maintainable in view of the terms of Ext.A8 agreement. However, on the ground under Section 11 (4)(ii), the Appellate Authority concurred with the finding of the Rent Control Court and held that the additional construction made by the tenant had not materially and permanently altered the value or utility of the building. With respect to the ground under Section 11(3), the Appellate Authority confirmed the finding of the Rent Control Court that the need was bonafide. On the question of protection of the second proviso to Section 11(3), the court below found that RCR No.241/2006 9 the Rent Control Court had gone wrong. Therefore, the finding on this aspect was set aside, the tenant was held not entitled to the benefit of the proviso and the Rent Control Petition was allowed. This revision is filed by the tenant challenging the said findings of the Appellate Authority. 6. According to the counsel for the tenant, a reading of Ext.A8 agreement shows that there was no landlord-tenant relationship between the petitioner and the respondent. According to him, on repayment of the amount of Rs.80,000/-, it is stipulated that a Rent Deed has to be executed among the parties. Inasmuch as there is no Rent Deed between the parties, a landlord-tenant relationship has not come into existence till date. Therefore, it is contended that the Rent Control Petition itself was not maintainable. It is further pointed out by the counsel for the tenant that there is no provision for termination of the lease in Ext.A8 agreement. Therefore, what is RCR No.241/2006 10 contemplated is a perpetual lease or a lease from year to year. Further, the liability to pay property tax is on the tenant which shows that the revision petitioner was not the tenant of the building. It is the further contention of the counsel for the tenant that the agreement Ext.A8 evidences a reciprocal promise that, on the return of the amount of Rs.80,000/- the landlord shall let out the building to the tenant on the fair rent to be fixed at that time. 7.The contentions of the tenant are resisted by the counsel for the landlord pointing out that in Ext.B5 reply notice issued by the tenant, it is admitted that the monthly rent for the building is Rs.967/-. Any person who is bound to pay rent is a tenant. Therefore, according to the counsel, there is landlord- tenant relationship between the parties. The landlord requires the petition schedule building for the occupation of his son and the need has been found to be genuine by the Appellate Authority. It is further RCR No.241/2006 11 pointed out that the tenant is a person who has other premises in his possession as well as other sources of income. Therefore, it is submitted that the Appellate Authority was justified in setting aside the findings of the Rent Control Court and ordering eviction of the tenant. For the above reasons, it is contended that the revision is liable to be dismissed. 8. We have heard Mr.K.Harilal who appears for the tenant and Mr.Sreekumar, the learned counsel for the landlord in extenso. Our attention has been drawn to the evidence in the case, both oral and documentary. We have anxiously considered the rival contentions urged before us. 9. A reading of Ext.A8 agreement shows that the relationship between the revision petitioner and the respondent in this case is that of a landlord and tenant. The said agreement has been entered into at a time when the landlord had borrowed an amount of Rs.80,000/- from the tenant for construction of the RCR No.241/2006 12 tenanted premises. The agreement stipulates that, as long as the amount remains unpaid, the rent in respect of the premises was liable to be adjusted towards the interest due on the borrowed amount. It is clear that the building has been given to the tenant on rent. The rent for the premises has been fixed at Rs.1.25 per sq.ft. The only other stipulation is that on return of the borrowed amount, a regular rent deed would be executed on the basis of the fair rent to be fixed at that time. The terms of the agreement definitely casts an obligation on the tenant to pay rent in respect of the premises occupied by him. A 'tenant' is, as per Section 2(6) of the Act, a person by whom or on whose account rent is payable for a building. Therefore, the revision petitioner is the tenant of the petition schedule building since the rent is to be paid by him. The respondent is a landlord as defined in Section 2(3) of the Act. The revision petitioner and the respondent being the RCR No.241/2006 13 tenant and landlord respectively, in relation to tenanted premises, there is no doubt that a landlord- tenant relationship exists between them. Consequently, the provisions of the Rent Control Act are applicable and the present Rent Control Petition is perfectly maintainable. 9. The next question is whether the terms of Ext.A8 agreement entitles the tenant to claim renewal of the lease as of right. And further, whether the tenant is entitled to continue in occupation of the premises indefinitely since there is no provision for renewal of the lease. The clause in Ext.A8 stipulates that on repayment of the amount of Rs.80,000/- due to the tenant, the tenanted premises would be let out to the tenant at the fair rent to be determined at that time. According to the counsel for the tenant, the above provision confers a right on the tenant to demand that he may be allowed to continue in occupation of the tenanted premises indefinitely, with RCR No.241/2006 14 the only liability to pay its fair rent. However, a careful reading of the clause shows that it places an embargo only on the right of the landlord to demand enhancement in rent without first discharging the debt that was due to the tenant. If further occupation were permitted after the amount was repaid, it is open to the landlord to demand the fair rent in respect of the premises. Therefore, the present clause does not confer any right of renewal of the lease on the tenant. The clause also does not put any restriction on the right of the landlord to demand vacant possession of the premises. 10. The scope of a similar term in an agreement came up for consideration before this Court in Aboobacker Keyi v Govindan Sons (1990(2) KLT 551). In the said case, the agreement provided that on the expiry of the term of 10 years, the tenant in the said case would have an option for renewal on terms to be decided at that time. After referring to the RCR No.241/2006 15 various decisions on the point and an analysis of the clause, Krishna Moorthy, J. has observed as follows: “ In other words, there is only an agreement to agree in future or there is a contract to enter into a contract, which, it is well-settled, is not enforceable at all. The terms of the renewed lease are to be decided afresh by the parties at the time of renewal and no guideline or indication is given in Ext.A1 as to the manner in which the terms have to be settled between the parties. Before giving the benefit of the equitable principle of part performance to the lessee, the court must be satisfied that there was an agreement between the parties, the terms of which are certain and unambiguous.” 11. The above dictum has been followed in Kunhalu v Baputty (1991(2) KLT 598). In the said case also, a similar clause had come up for the interpretation of this Court. In the said case, though the clause provided for the renewal of a lease, the terms and conditions subject to which the renewal was to be made were not specified. This Court, after considering the clause came to the conclusion that the clause contained only an agreement to agree, leaving the terms and conditions in the dark. Such a vague clause was not capable of enforcement, it was held. RCR No.241/2006 16 12. In the present case also, the term in Ext.A8 agreement is vague and uncertain. The term only says that on repayment of the amount of Rs.80,000/-, the building would be let out to the tenant on the fair rent to be determined, at that time. The term for which the building would be let out as well as the conditions subject to which the arrangement would be permitted to continue are all left to be decided among the parties in future. Therefore, in this case also, the parties have not reached any agreement regarding the terms subject to which the future renewal was to be effected. The parties have only reached an agreement to agree, subject to the terms that are to be agreed upon by them in future. Therefore, as in the reported decisions referred to above, the clause in the instant case is also vague, uncertain and unenforceable. 13. Apart from the above, even in cases where the parties unambiguously agree to renew the lease RCR No.241/2006 17 as per a clause in an agreement, they cannot contract out the benefits of the provisions of the Act. While considering the scope of a clause in an agreement by which the tenant was conferred a right to insist on a renewal of the lease on condition that the rent was increased by 10% with every renewal, a Division Bench of this Court held that such a clause was not enforceable. In the decision reported in Allied Traders v The Cochin Oil Merchants Association (2002(1) KLT 886), speaking for the Division Bench K.S.Radhakrishnan, J. (as he then was) held as follows: “We are of the view that a tenant or landlord cannot contract out of the provisions in the Rent Control Act if the building lies within the purview of the Rent Control Act. It is true that they can lay down a contractual fixed term of lease and during the pendency of the term of lease eviction cannot be ordered. But indefinite continuance of the tenant even after the landlord has satisfied the ingredients of S.11 of the Act, in our view, would be defeating the object and purpose of rent control legislation. That will defeat the spirit and object of the Rent Control Act.” 14. In the light of the above pronouncements, the RCR No.241/2006 18 contention of the tenant that Ext.A8 agreement term creates a lease in perpetuity, which shall continue from year to year, with no liability on the part of the tenant to be evicted, is liable to be rejected. It is also pertinent to note that any lease for a period exceeding one year can be created only by a registered instrument in terms of Section 106 of the Transfer of Property Act and Section 17(1)(d) of the Registration Act, 1908. Since Ext.A8 agreement is an unregistered document, the case of the tenant has to fail for the above reason also. 15. The authorities below have concurrently found that the need projected by the landlord is genuine and bonafide. The evidence of Pws.1 and 2 have been relied upon by the authorities below to find that the tenanted building is needed by the landlord for the occupation of his son. It has come out in evidence that the tenant is carrying on business at other places also. Therefore, it is clear that he has RCR No.241/2006 19 other sources of income. As rightly held by the authorities below, the tenant has not been able to prove that the income earned by him from the business carried on in the tenanted premises is his main source of income. The Advocate Commissioner has reported that other buildings are available in the locality for the tenant to shift his business. We concur with the finding of the Appellate Authority that the tenant is not entitled to protection of the second proviso to Section 11(3). We also do not find any grounds to interfere with the concurrent findings of the authorities below that the need of the landlord is bonafide. In view of the above, the revision fails and is accordingly dismissed. 16. As a last plea, the counsel for the tenant requested for some time to vacate the premises. In the facts and circumstances of the case, we feel that the tenant can be given time up to 30.4.2010 to surrender vacant possession of the premises subject RCR No.241/2006 20 to conditions. 17. In the result, the Rent Control Revision is dismissed. i) The tenant is granted time up to 30.4.2010 to surrender vacant possession of the tenanted premises to the landlord on condition that he files an affidavit before the Rent Control Court or the Appellate Authority, as the case may be within a period of two weeks from today, undertaking to surrender peaceful possession of the petition schedule premises to the landlord on or before the said date. ii) The tenant shall pay all arrears of rent due in respect of the premises and shall continue to pay rent in respect of the premises without default, till he surrenders vacant possession thereof to the landlord. It is made clear that the tenant shall be entitled to the benefit of the time granted herein above, only if he complies with the above directions. RCR No.241/2006 21 In the circumstances of the case, there will be no order as to costs. PIUS C.KURIAKOSE, JUDGE K.SURENDRA MOHAN, JUDGE css/