Case: M/S Hotel Kings  Vs. Sara Farhan Lukmani

Respondent Nos. 1 to 4 in both the special leave petitions are the owners of a plot of land measuring about 2739.50 sq.yds. bearing survey No. 37, situated at Juhu, Greater Bombay. The said land was leased to one M/s.H. Bloch Engineering Pvt. Ltd. by a registered deed of lease dated 3rd November, 1966. By a deed of assignment dated 8th June, 1970, the said lessee transferred and assigned the demised property to M/s. Yashdhir Hotels Pvt. Ltd., a company registered under the Companies Act. The original lease was for 98 years commencing from 1st November, 1966. By virtue of the deed of assignment dated 8th June, 1970, M/s.Yashdhir Hotels Pvt. Ltd. became the lessee of the said land for the unexpired period of the lease and became a tenant under the respondent Nos. 1 to 4. The lease rent was initially fixed at Rs.3,215/- per month, but was thereafter increased to Rs.3,450/- per month. As M/s. Yashdhir Hotels Pvt. Ltd. defaulted in payment of rent for more than six months, the respondent Nos. 1 to 4 issued a notice dated 1st February, 1983 to M/s. Yashdhir Hotels Pvt. Ltd.. It appears that on receipt of the notice, M/s. Yashdhir Hotels Pvt. Ltd. tendered rent to the lessors for a period of fourteen months but the same was refused as the same did not constitute the entire arrears of rent payable by the lessees. It was also the claim of the lessors that the lessee had unlawfully sublet the demisedrefused to accept the rent for fourteen months tendered by the lessee, the lessors filed a suit, being R.A.E.No.732/2538/1983, claiming possession on the ground that the lessee had defaulted in payment of thefrom the lessee, certain other parties were made defendants in the suit on the allegation that the suit property had been sublet by the lessee in their favour. The defendants filed their written statements and while admitting that M/s.Yashdhir Hotels Pvt. Ltd. had become the tenant of the leasehold premises by virtue of the deed of assignment, denied that the lessee was in arrears of rent as alleged. According to the defendants, the lease rent, which was initially fixed at Rs.3,215/- per month and was thereafter enhanced to Rs.3,450/- per month, was payable after every six months and not monthly as claimed by the lessors. It was also contended that although the rent had been tendered by cheque along with a letter dated 23rd April, 1983, the same had been wrongly refused by the lessors. It was also contended that since the period of lease was 98 years which was still subsisting, and there was no breach of any of the terms and conditions of the lease, the lessors were not entitled to get possession of the suit property. It was the specific case of the defendant Nos. 2 to 5 that under the deed of lease, the lessee was entitled to let out the structure erected on the leasehold property or any partlearned trial judge, on an assessment of the evidence adduced by the parties, came to the conclusion that the rent of the suit property was payable every six months. Consequently, even if the defendants were in arrears of rent for more than six months on the date of the notice dated 1st February, 1983, the lessors were not entitled to possession in view of the provisions of Section 12 (3) (a) of the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947, (hereinafter referred to as the "Bombay Rent Act.") On the basis of the aforesaid finding, the learned trial court dismissed the lessors suit forlessors preferred an appeal against the said order of the learned trial judge which was numbered as Appeal No.76/1997. In the appeal, the Appellate Bench of the Small Causes Court, Bombay, came to a conclusion that the rent for the demised premises was payable every month and not after six months as held by the trial court. Holding further that the notice terminating the defendants tenancy was legal and valid, the appellate court decreed the suit for possession on the ground mentioned in Section 12 (3) (a) of the Bombay Rentby the order of the Appellate Bench of the Small Causes Court, Bombay, the lessee filed a Writ Petition, being No.6812/2005. Other defendant Nos. 2 to 5 also filed a separate Writ Petition, being No. 6813/2005. As both the writ petitions arose out of the same judgment, they were taken up together for disposal by the Bombay High Court and were disposed of by a common judgment dated 8th February, 2006, which is the subject matter of challenge in both theselooking into the various provisions of the lease, the High Court affirmed the view of the Appellate Bench of the Small Causes Court that the rent was payable each month and not after every six months and that the finding in this regard was unassailable. The High Court was also of the view that since the lessee had committed breach of the conditions of the lease deed and had become a defaulter, it was not entitled to the protection of Section 114 of the Transfer of Property Act,appeals have been filed by the lessee and the defendant Nos. 2 to 5. M/s.Yashdhir Hotels Pvt. Ltd. has filed Civil Appeal arising out of SLP ) No. 7400/2006 and defendant Nos. 2 to 5 have filed Civil Appeal arising out of SLP.both the appeals arise out of a common judgment passed by the High Court, with the consent of the parties, they have been taken up together for hearing and disposal.

Reasoning:
Having given our anxious consideration to the submissions urged on behalf of the respective parties and the provisions of the Bombay Rent Act and the various decisions cited, we are of the view that the decision of the Appellate Bench of the Small Causes Court at Bombay as affirmed by the High Court holding that the lease was governed under Section 12 (3) (a) of the Bombay Rent Act was correct. The lease deed makes it abundantly clear that the lease rent was required to be paid on a monthlysaid position has been further reiterated in paragraph 3 (a) of the said deed of lease. The argument advanced on behalf of the lessee that notwithstanding the said stipulation, since the lessee was required to pay the rates and taxes which formed part of the permitted increase and was, therefore, a part of the rent payable, does not appeal to us. The consequential submission made in this regard that since the rates and taxes were payable either annually or after every six months, and the same formed part of the rent, it must be held that the rents were payable not each month but after every six months, does not also appeal tothe decisions in the Bombay Municipal Corporation case and Raju Kakara Shetty (supra), the views expressed therein are distinguishable on facts with the facts of these two appeals. Both the said judgments deal with payment of education cess under the Maharashtra Education (Cess) Act, 1962, under which the landlord is liable to pay such cess annually but has the right to recover the amount so paid by him from the tenant in addition to the standard rent as a part of the rent itself. By operation of law education cess has been made a component of the rent payable by the tenant in respect of the tenanted premises. In such a case, the concept of permitted increase would include the cess payable as part of the rent itself. In the instant case, however, the lessee is required to pay the rates and taxes and other outgoings for the demised premises in respect whereof the landlord has been given the right to effect permitted increase equivalent to the amount paid towards rates and taxes. The same does not, in our view, makes such payment a part of the rent though it may be a consideration for the grant of lease. The permitted increase in the instant case serves as a yardstick for the landlord to increase the rents on account of payment of rates and taxes by the landlord. Consequently, even though the lease deed contained a provision for payment of the rates and taxes exclusively by the lessee and it is also stipulated that the lessor will have no liability therefor, the lease will still be governed under Section 12 (3) (a) of the Bombay Rent Act as held by the Appellate Bench of the Small Causes Court at Bombay and affirmed by the High Court. The expression "consideration" indicated in Section 105 of the Transfer of Property Act has been used in a generic sense to include the price paid or promised or of money, a share of crops, service or any other thing of value. On the other hand, the lease deed specifies the amount to be paid as rent each month while the rates and taxes and other outgoings are treated to be the separate liability of the lessee, no doubt having regard to the intention of the parties that a building was to be erected by the lessee on the demisedwe have arrived at the aforesaid conclusion, the other submissions made on behalf of the appellant in Civil Appeal arising out of SLP No.7400/06 become irrelevant. However, having regard to the provisions of the lease deed, there can be little doubt that the decree for possession passed against the lessee will not bind the appellants in the Civil Appeal arising out of S.L.P) (C) No. 7186 of 2006 who have acquired an independent status under the provisions of the deed of lease permitting assignment of the structure to be erected on the demised land. In their case, the question of induction prior to 1st February, 1973, would have no application. Although, it has been submitted by Mr. Ranjit Kumar that the provisions of clause 6 of the lease deed must be read with clause 3(o) thereof, the intention of the parties on the reading of the lease deed as a whole appears to be that the lessee would be entitled to make construction on the demised premises which could be assigned by it to third parties who would acquire an independent right therein subject to the terms and conditions of the head lease.