(This petition coming on for hearing before Rajamannar, C.J, and Panchapakesa Aiyar, J., on 18-1-51, the Court made the following:—
ORDER OF REFERENCE TO THE FULL BENCH
The chief Justice:—Under S. 7(3) of the Madras Buildings (Lease and Rent Control) Act a landlord may apply to the Controller for an order directing the tenant to put the landlord in possession (i) in the case of a residential building, if he requires it for his own occupation and it he is not occupying a residential building of his own in the city, town or village concerned.
The Act does not contain a definition of a residential building. There is however, a definition of “building”. “Building” means, “any building or hut or part or building or hut, let or to be let separately for residential or non-residential purposes.”
The only question in this case is whether the building which is the subject matter of the application is a residential or a non-residential building. The findings which are material for a determination of this question are as follows: For several years the building was being used for the residence of the petitioner and P.W 2. Then, it was let to a tenant who was carrying on business in Chappals and thereafter to the present tenant for his business in hides and skins. Structurally the building appears to have been meant for residence rather than for carrying on business. The locality in which the building is situate is predominantly a business locality.
If the sole test for determining whether a building is residential or not is the purpose for which the building was let to the tenant in occupation at the time of the application for eviction, then undoubtedly, the building is a non-residential building. But the appellate tribunal in this case, the Chief Judge of the Court of Small Causes, has held that as it was once used for residential purposes and was structurally such that it must have been intended for residence, mere user for a number of years as a non-residential building would not make it non-residential and therefore it must be deemed to be a residential building. In coming to this conclusion he was largely influenced by the observations made by this Court in a decision to which I was a party in C.M.P No. 6150 of 1948. In that case the building was actually being used as a restaurant at the time of the application for eviction, but by its nature and by its structure it was a residential building. Both the Rent Controller and the appellate tribunal held that it was a residential building. In view of the fact that by its nature and structure the building was residential in character it was held, that the appellate tribunal was justified in its finding. I went on to say,
“If by reason of the original character it was residential, the fact that for sometime—may be even for a long time—it was being used for purposes other than residence, would by itself not make the building non-residential.”
Reliance was placed on S. 11(1) of the Act, but we were inclined to hold that what was contemplated by that section was structural alteration which converted a residential building into a non-residential building.
Since that decision I have come across other cases in which conflicting considerations have placed me often in a state of uncertainty as to the meaning to be given to a “residential building” in S. 7(3). If the definition of “building” gives a clue, then, a residential building is a building let or to be let for residential purposes. That furnishes no doubt a simple test which has also the merit of reasonable certainty. But I have found it difficult to adopt that test in the case of a building which, for instance, might be the family house of the owner in which he and his predecessors had been residing for years and therefore was at one time a residential building which, however, has been let for business purposes at the material period. The question will then arise whether there has been a conversion of a residential building into a non-residential building. I was at one time inclined to think that the conversion contemplated was by means of a structural alteration. But my attention has been drawn to the decision in Williams v. Perry(1), in which Swift J. observed.
“I can see no reason why a dwelling house should not be converted into business premises just as much by the agreement of the parties and their user as by structural alteration.”
These remarks appear to me to show a way out of the difficulty.
I expressed more than once the desirability of the Legislature clarifying the position by a definition of a residential building, but evidently there has been no attempt in this direction. As this is a matter which constantly comes up throughout the State, it is desirable that there should be an authoritative ruling laying down at least certain broad tests to find out if a building is or is not a residential building within the meaning of the Madras Buildings (Lease and Rent Control) Act.
The petition will be posted before a Full Bench.
Panchapakesa Aiyar J:—I agree.
(In pursuance of the above order, this petition coming on for final hearing, the Court delivered the following):—
JUDGMENT
(Delivered by Raghava Rao, J.)
This matter comes up on a reference to a Full Bench by my Lord the Chief Justice and Panchapakesa Aiyar, J. The question is whether the premises in the possession of the petitioner, the tenant, are in the nature of a non-residential building, of which it is not open to the landlord, the respondent, to ask for possession, under S. 7(3)(a)(i) of Madras Act XXV of 1949. The Madras Buildings (Lease and Rent Control) Act.
The findings of fact material to the determination of the question are stated in the Order of Reference thus:
“For several years the building was being used for the residence of the petitioner and P.W 2. Then, it was let to a tenant who was carrying on business in chappals and thereafter to the present tenant for his business in hides and skins. Structurally the building appears to have been meant for residence rather than for carrying on business. The locality in which the building is situate is predominantly a business locality.”
The reference has been necessitated by the fact that the Bench which has made it has doubted the soundness of the view expressed in C.M.P No. 6150 of 1948 to which the learned Chief Justice himself was also a party, concerning the test for determining whether a building is residential or not within Madras Act XXV of 1949. That view is that if by reason of the original nature and structure of the building it was residential the fact that for some time—may be even for a long time—it was being used for purposes other than residence, would by itself not make the building non-residential. In the order of reference it is observed that if the definition of “building” in the Act gives a clue, then a residential building is a building let or to be let for residential purposes. The question is whether the view which favours regard for the original structural design or the view which emphasises the importance of the letting of the building as for a residential purpose is to be preferred.
To have regard to the provisions of the Act so far as they throw light upon the matter, we find first that the preamble states that
“It is expedient to regulate the letting of residential and non-residential buildings and to prevent unreasonable eviction of tenants therefrom.”
Next the definition of “building” in S. 2(1) is that it means “any building or hut or part of a building or hut, let or to be let separately for residential or non-residential purposes.” “Let” in the definition apparently means “let at the time of the passing of the Act” while “to be let” in the definition means “to be let after the passing of the Act.” “Residential building” of which as such there is no definition in the Act must in the light of the definition of “building” mean “any building or hut or part of a building or hut let or to be let separately for residential purposes.”
S. 7(3)(a)(i) provides that,
“A landlord may apply to the Controller for an order directing the tenant to put the landlord in possession—(i) in the case of a residential building, if he requires it for his own occupation and if he is not occupying a residential building of his own, in the city, town or village concerned.
(ii) in the case of a non-residential building, if he is not occupying for purposes of a business which he is carrying on, a non-residential building in the city, town or village concerned which is his own or to the possession of which he is entitled.”
Then we have S. 11(1) which states that,
“No residential building shall be converted into a non-residential building except with the permission in writing of the Controller.”
It may be relevant also to notice at this juncture that S. 4 of Madras Act VIII of 1951 has replaced S. 3 of the Madras Act XXV of 1949 by something more detailed than and in some respects differing from the provisions of the latter section. Sub-S. (5) of S. 3 of the Act of 1949 as amended in 1951 contains three provisoes of which the second and the third are material to the present discussion, namely
“Provided further that if the building is a residential building, it shall not be converted into a non-residential building unless the permission in writing of the Controller is obtained under S. 11, Sub-S. (1);
Provided also that no structural alterations shall be made in the building, unless the consent of the landlord is also obtained therefor.”
From these provisions the following material factors emerge: (1) that the Act must be so construed as to prevent unreasonable eviction of tenants; (2) that while “residential” according to its ordinary dictionary meaning (Vide the Concise Oxford Dictionary 3rd Edition 1944 page 998) may mean one of two things, (i) suitable for or occupied by private houses (e.g residential estates, street, quarter) and (ii) “connected with residence” (e.g residential qualifications) the latter of which is the one pertinent to the present context, the statute brings in, with reference to what a “residential building” means, by its definition of “building” the idea that the residential building must be one let or to be let for purposes connected with residence; (iii) that the residential or non-residential character of the building for the purpose of a landlord's application under S. 7(3)(a) of the Act must be determined with reference to the date and purpose of the letting, the two-fold condition for the application to succeed under (i) being that the landlord requires it for his own occupation, and that he is not occupying a residential building of his own and under (ii) the condition being that he is not occupying of the purposes of a business which he is carrying on a non-residential building which is his own or to the possession of which he is entitled; (4) that the status which a building commands as a residential building under the letting shall not be converted into that of a non-residential building, apparently by the tenant, except with the permission in writing of the Controller; and (5) that the two provisoes to Sub-S. (5) of S. 3 as amended, when read together, suggest that the conversion of a residential building into a non-residential building need not always be by structural alterations, but that if the conversion is by such alterations, the consent of the landlord, in addition to the permission in writing of the Controller, is also a pre-requisite for such a conversion.
It seems to us therefore that what is at the inception a residential building may well become a non-residential by force of the terms of a letting, and that any conversion, after the letting, of a residential building into a non-residential may well take place within and only within the limits which the statute prescribes. That if prior to a letting a building happens to have been of one character it must for ever keep that character irrespective of what the effect of the letting or of the acts of parties subsequent to the letting may be, seems to our minds to be a difficult, if not impossible, position, having regard to the considerations above set forth. The original design of the structure may have been one suitable to residence, but if by the letting it became non-residential in character, there is no reason why one may not take it as such for the purpose of S. 7. Sub-S. (3). It seems to us that if a landlord has let out a building for a residential or non-residential purpose as the case may be, it is only fair that when he seeks an order directing the tenant to put him in possession of the property, he has to show that he fulfils the requirements of Sub-Cl. (i) or (ii) of Cl. (a) of Sub-S. (3) of S. 7 Having let out the building as for a non-residential purpose, it would be unfair if we were allowed to urge the requirement of the building for his own occupation, which is really a condition of his seeking to recover a residential building let out by him. The purpose of the letting and the condition of the landlord's recovery have alike reference to a residential or non-residential purpose according as a given case falls under Sub. Cl. (i) or Sub-Cl. (ii) of Sub-S. 3(a) of S. 7.
It is true as observed in the order of reference that this sort of test might sometimes work a hardship as for instance in the case of a building
“which might be the family house or the owner in which he and his predecessors had been residing for years and therefore was at one time a residential building which however has been let for business purposes at the material period.”
On the other hand, there is no denying too that, as also observed in the order of reference, the clue afforded by the definition of “building” in the matter of the determination of the question whether a building is residential or non-residential “furnishes a simple test which has also the merit of reasonable certainty.” Between these two conflicting tests we have no doubt but that the latter ought to be preferred as more consonant to considerations connected with the object and purpose of the Act as explained above and the scope and intendment of its several relevant sections as set forth already. This Court always listens and listens with due attention to an argument ab inconvenienti or even ad miscricordium. We feel however perfectly clear that the argument of hardship cannot prevail here.
The learned Advocate for the respondent has urged that the definition of “building” cannot be treated as affording a clue to the determination of the question whether a building is residential or non-residential. He says that the object of the definition of “building” is not that, and that the idea of the definition is to show that there can be a letting of a part as well as the whole of the building. Surely that is not a complete reading of the definition of “building” which also refers to residential or non-residential purposes in connection with the letting of the building in whole or in part. Counsel also urges that this view of what “a residential building,” is does not fit in with the meaning of that expression as used for the second time in S. 7(3)(a)(i). His point seems to be that one and the same meaning ought to be attached to that expression as used in both the places in S. 7(3)(a)(i), and that such meaning must be “a building suitable for residence by its structural design” and not “a building let or to be let for residential purposes”; for, “if he is not occupying a residential building of his own” in that provision cannot mean “if he is not occupying a building let or to be let for residential purposes.” The suggestion seems to have some plausibility of reason behind it; but there is no rule of law which in any and every case forbids the interpretation of the same expression in two different senses as used in two different places although in one and the same provision of the statute. “Residential building” in the first place where it is used may well mean “a building let or to be let for the residential purposes”; where it is next used, it may as well mean simpliciter “a building of a residential character.” After all, the definition of “building” given in S. 2 of the Act only operates where there is nothing repugnant in the subject or context, as is made clear by the opening words of the section. If the definition cannot be applied for the ascertainment of the meaning of the expression “a residential building” in the second place in which it is used in S. 7(3)(a)(i) but can be applied for such a purpose with reference to the first place in which the expression “residential building” occurs, there is no reason why the clue afforded by the definition of “building” may not be pressed into service for the ascertainment of the meaning of the expression “residential building” as it occurs in the first place, though not as used in the second. The purpose of residence involved and implied in the expression “residential building” in both the places is of course there; only the idea of letting is there in the first context, while it is not there in the second.
For the purpose of determining whether a building is residential or non-residential according to the view expressed above of what a “residential building” means, we have to bear in mind a few and salient considerations, which propose to indicate (1) Where there is an instrument of tenancy specifically and explicitly declaring the purpose of the letting as residential or non-residential, no difficulty generally arises; (2) where there is no such instrument of tenancy the question will have to be considered on the basis of direct evidence aliunde concerning the purpose of the letting, which may be adduced in a case. (3) If no such evidence too is forthcoming, the Court can only look at the evidence concerning the user of the premises by the tenant down to the date of the application for eviction as acquiesced in by the landlord. For such user and such acquiescence afford a safe basis for an inference of agreement between the parties as to the purpose of the letting. (4) Where there is evidence of such user, but there is no evidence of such acquiescence, the structural design, the antecedent user of the building by the landlord as known to the tenant and other surrounding circumstances, if any, will also have to enter into the determination of the question whether the building is or is not residential. (5) Difficulty may sometimes still remain, i.e, evidence after applying the tests above indicated, if the building is found let for both kinds of purposes, residential and non-residential, no distinction being made between one part as let for one purpose and the other for the other purpose. In such a case it seems to us, that what has to be determined as a question of fact is, what was the real, main and substantial purpose of the letting?
As supporting or bearing on these considerations as affording the relevant tests, I wish to refer next to a few decisions of the Courts in England rendered under the Rent Restrictions Act prevailing there, which have been cited by learned Counsel for the petitioner. It may be noted that, broadly speaking in England there is distinction made in those Acts between a “dwelling house” and “business premises”
In the case of Williams v. Perry premises which were occupied from 1914 till 1919 partly as business premises and partly as a dwelling house, were in 1919 let to the defendant solely as business premises. It was held that the premises were not within the protection of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920. At the end of the judgment of Swift, J., with which Acton, J., agreed, there is the observation at page 940 of the Report quoted in the order of reference before us which is relevant to the present discussion.
“I can see no reason why a dwelling house should not be converted into business premises just as much by the agreement of the parties and their user as by structural alteration”
In the case of Hyman v. Steward(2), the question which arose was whether the dwelling house there in question had become converted into business premises and therefore disentitled to the protection of the Increase of Rent and Mortgage Interest (Restriction) Act by reason of abandonment of all residence whatsoever on the part of the tenant. The County Court Judge found on the facts proved that there had been no such change of user as to destroy the character of dwelling house with which the premises were impressed by the tenancy agreement and gave judgment for the defendant, which was upheld on appeal. The main point about this decision so far as material to this case is that it shows that the character of dwelling house may well be impressed upon premises by the terms of the tenancy agreement. The further fact to notice is that in Greer J's., judgment at page 712 of the Report there occurs this observation:
“I confine myself to saying that if there had been a complete change of user of the premises by reason of the defendant entirely ceasing to use them as a dwelling house and using them all for business or trade purposes, and if the plaintiff had not interfered and was estopped by acquiescence from preventing the altered user of the premises as business premises. I think that the premises could then have been described as premises let entirely for business purposes, and not partly for residential and partly for business purposes.”
That shows that in England where premises are let as a dwelling house, conversion thereof into business premises can be effected by such conduct on the part of the tenant acquiesced in by the landlord as is sufficient to erect an estoppel against the landlord from pleading that the premises must be regarded as still continuing as a dwelling house. Here, we have limits set by our own Acts to such conversion.
The next case Vickery v. Martin is a decision of the Court of Appeal and is interesting as only showing that in England there is in S. 3 Sub-S. (3) of the Rent and Mortgage Interest (Restrictions) Act of 1939 which repeats in practically the same words S. 12 Sub-S. 2(ii) of the previous Act of 1920, a specific provision that it is not sufficient to exclude a dwelling house from the operation of the Act merely to show that part of the premises is used as a shop or office or for business, trade or professional purposes. It is in view of this specific provision that Lord Greene M.R says thus at page 684 of the Report:
“I decline, with the language of the Subsection before me, to embark on an inquiry what is the substantial use or what, in the language of the County Court Judge is the principal or ancillary use of these premises.”
We do not have here a provision to that effect, and where a house is found let for both residential and non-residential purposes, as I have already stated, the question will arise, what was the main, real and substantial purpose of the letting, residential or non-residential.
The case of Wolfe v. Hogan is important as containing a discussion of the general considerations pertinent to the determination of the question whether premises of which possession is sought by a landlord are “let as a separate building” within the meaning of S. 12 Sub-S. (2) of the Rent and Mortgage Interest (Restrictions) Act of 1920. Those considerations are laid down in this decision of the Court of Appeal, on practically the same lines as we have adopted earlier in this judgment in enunciating the salient considerations connected with the evidentiary material on the basis of which Courts here have to decide whether a building is or is not residential within the meaning of our Act. It is not, in our opinion, necessary to deal further with this decision.
We propose next to turn to two decisions not cited at the Bar, the one reported in Krishna Nair v. Valliammal(3) and the other reported in Waller v. Thomas(4) which bear upon the test of “real main and substantial purpose of the letting” referred to above by us as coming up for application in case where a building as a whole is found let for both kinds of purposes, residential and non-residential no distinction being made between one part as let for one kind of purpose and the other for the other kind of purpose. In the Madras case decided by Panchapakesa Aiyar J. what has been ruled by the learned Judge is that in determining whether certain premises are residential or non-residential, the main or primary purpose for which they are let out or taken or used must be considered. The premises in that case were held to have been let out for a residential purpose, although a portion thereof was used for making appalams when people were not sleeping there and was used for sleeping purposes when appalams were not made there. Save the learned Judge at page 76 of the Report:
“I consider that, in such cases, the primary purpose for which the building is let out or used should be the determining factor. A lawyer may use a room of his house for giving legal advice to his clients: an astrologer may use a room of his house for giving predictions; a barber may use a room of his house for shaving his clients; but such use of a room will never make a house itself one used for non-residential purpose.”
Cases in which premises are used exclusively for business purposes or exclusively for dwelling purposes present no difficulty. It is in cases in which the purpose of the letting happens to be both ways that a test has to be sought for the resolution of the difficulty arising from the dual character of the premises as let. The test laid down by the learned Judge seems to our minds to be sound.
The case remaining still for consideration is the English case referred to above. The question there arose whether a public house which contained dwelling house accommodation constituted a dwelling house which fell within the general provisions of Increase of Rent and Mortgage Interest (Retrictions) Act of 1920 or constituted business premises which fell within S. 13 of the Act. Both the learned Judges who composed the Divisional Bench, Lush J. and McCardie J. ruled that the premises were in the nature of a dwelling house and not in the nature of business premises. McCardie J's judgment is, however, the one which contains matter relevant to the present discussion. The learned Judge says first at page 553 of the report that,
“Under the Increase of Rent (Restrictions) Acts prior to 1920 the Court of Appeal had to consider this very point in Epsom Grand Stand Association v. Clarke and there held in the dearest terms that a public house was “a dwelling house” for the purpose of those Acts.”
He then reproduces a passage from Bank L.J's judgment in the Epsom case, which expresses the reasoning in support of the conclusion in that case thus:
“Was this a dwelling house? The house was dwelt in, and it was let to the defendant for that purpose. In the fullest sense it was a dwelling house, and none the less so because it was also a public house. He could not accept Mr. Disturnal's contention that because it was let for business purposes it could not be dwelling house within the Act. If that contention were accepted it would exclude a great many premises which the Legislature did not intend to be excluded.”
McCardie J. then proceeds to observe.
“That is a definite decision of the Court of appeal, but I confess to feeling that juristic criticism may be properly applied to it. I feel with the deepest respect that the true test is to ascertain the dominant purpose and principal user of the premises. One might well have thought that the dominant purpose and object of a public house was to carry on the business of a licensed victualler and that the provision of accommodation for the occupants was a mere adjunct of the business. One might have said that premises do not cease to be ‘business premises’ because dwelling accommodation necessary for the purpose of the business is attached. However the Court of Appeal have taken a different view and we must loyally follow it.”
Then the learned Judge proceeds to point out that the Act of 1920 recognised the Epsom decision and treated it as an integral part of the scheme of the Act; for S. 12 Sub-S. 2(ii) provided that the application of the Act should not stand excluded by reason only that part of the premises was used as a shop or office or for business, trade or professional purposes. Reading the Epsom decision in conjunction with the words of the Act of 1920 says the learned Judge in conclusion:
“I cannot avoid the conclusion that this house must be treated as a dwelling house within the general provisions of the Act rather than as business premises under S. 13 with the special modifications therein provided.”
Here in our statute as we have already observed, we do not have any provision such as came to be enacted in the English Act of 1920 by way of giving effect to the Epsom decision; and if the juristic criticism applied to the Epsom decision by McCardie J. is to be accepted as sound, there is no reason why the test of dominant purpose and principal user propounded by the learned Judge should not be regarded as applicable to cases arising under our statute.
It is true that the test of dominant purpose and principal user is not always easy of application. Applied certainly it can be, speaking generally, though with some difficulty in some cases. Such difficulty in the actual application of the test in such cases will only mean that a margin of judicial discretion in the matter of the determination of the question of the character of the building as a question of fact has necessarily to be allowed for. Instances of transactions inspired by mixed motives and intents in which the question of the main, real and dominant motive and intent has to be canvassed for validating or invalidating them are not uncommon in other branches of law. There can in our judgment be no reason of principle why a canvass of the main, real and dominant purpose should be regarded as not legitimate in this branch of law in cases where the letting is actuated by mixed purposes.
It only remains to add that where the Court finds the letting to be equally for residential and non-residential purposes and not mainly or substantially for the one or the other kind of purpose the application by the landlord may well stand whether filed under S. 7(3)(a)(i) or S. 7(3)(a)(ii) of the Act.
Judging the case before us on the facts found and in the light of the legal principles indicated in the foregoing, we are of opinion that the purpose of the letting being non-residential, the mere structural fitness of the building for residence at the time of the letting does not avail the respondent to contend that because he is not in occupation of a residential building of his own in the City and requires this building for his own occupation he can evict the petitioner from the premises. This application accordingly succeeds with costs. (Advocate's fee Rs. 100).
V.C.S
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