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Smart Summary

Comprehensive Summary of the Opinion (Kumar, J.)

Factual and Procedural Background

The plaintiff is the owner of a shop premises let to the defendant at a monthly rent of Rs. 870.00. The plaintiff served a legal notice dated 30.10.1998 terminating the tenancy and called upon the defendant to vacate and deliver vacant possession on expiry of 30.11.1998; the notice was duly served. The defendant admitted the tenancy and the rent but pleaded that the lease had been renewed for a further period of 15 years and therefore refused to vacate. The plaintiff filed Suit O.S. No. 9619/1998 in the 14th Additional City Civil Judge, Bangalore, seeking ejectment and an inquiry to determine mesne profits for wrongful use and occupation after termination. The defendant filed a written statement admitting landlord-tenant relationship and receipt of the notice, but contending (inter alia) that the lease had been renewed and that the City Civil Court lacked jurisdiction because the Court of Small Causes had exclusive jurisdiction to grant the reliefs sought. The trial court framed, as a preliminary issue, the question: “Whether this Court has no jurisdiction to try the suit?”. The trial court, after hearing the parties on that preliminary issue, held that because the plaintiff sought mesne profits for use and occupation after termination, the suit was not cognizable by the Court of Small Causes and therefore the City Civil Court had jurisdiction. The defendant (as petitioner in revision) challenged that order by filing the present revision (C.R.P.).

Legal Issues Presented

  1. Whether the City Civil Court has jurisdiction to try a suit for ejectment and for mesne profits (or damages for use and occupation) where the premises are non-residential and the rent exceeds Rs. 500 per month, or whether such a suit is cognizable by the Court of Small Causes.
  2. To a tenancy to which the Karnataka Rent Control Act (K.R.C. Act) applies but to which Part V of the Act does not apply (that is, non-residential premises with monthly rent exceeding Rs. 500), what is the position of the tenant after determination of the tenancy either by termination or by efflux of time — specifically, whether the person continuing in possession is a tenant liable only for rent or becomes a trespasser liable for mesne profits/damages for use and occupation.

Arguments of the Parties

Petitioner's (Defendant's) Arguments

  • Section 31 of the K.R.C. Act exempts Part V (control of eviction) for non-residential premises with rent exceeding Rs. 500 per month, but it does not exempt the rest of the Act; therefore, other provisions (including the definition of tenant) remain applicable.
  • After a valid termination under Section 106 of the Transfer of Property Act (T.P. Act), the defendant continues to be a tenant as defined in Section 3(r) of the K.R.C. Act and is liable to pay the agreed rent; he does not become a trespasser and is not liable to pay mesne profits or damages for use and occupation.
  • Accordingly, the relief claimed by the plaintiff is, in substance, a claim for rent and not mesne profits; such a suit for ejectment and rent (where jurisdictional value is within limits) is cognizable by the Court of Small Causes, not the City Civil Court.
  • Relied upon decisions: B.S. Giridhar v. P.V. Shetty (ILR 1984 KAR 1115) and Triveni Theatres v. R.S. Devakumar (2001 4 KLJ 412) to support the proposition that post-termination possession under the K.R.C. Act remains tenancy and obligations to pay rent continue.

Respondent's (Plaintiff's) Arguments

  • Once tenancy is terminated under the Transfer of Property Act by a Section 106 notice or by efflux of time, the tenant's possession becomes unlawful; the tenant continuing in possession is liable to pay damages for use and occupation or mesne profits.
  • A suit for recovery of mesne profits or damages for use and occupation is a suit for recovery of an interest in the property and is therefore excepted from the cognizance of the Court of Small Causes; such suits fall outside that Court's jurisdiction and are triable by other civil courts such as the City Civil Court.
  • Accordingly, the trial court's finding that the City Civil Court had jurisdiction to entertain the suit was correct.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
B.S. Giridhar v. P.V. Shetty, ILR 1984 KAR 1115 Interpreted Section 31 of the K.R.C. Act as exempting only Part V (eviction provisions) and held that persons continuing in possession after termination remain tenants under Section 3(r), liable to pay rent; Part V immunity does not remove other statutory rights/obligations. The court followed and relied on this decision to conclude that Section 31 exempts only Part V and that a person continuing in possession after termination remains a tenant and is liable to pay rent; therefore mesne profits or damages for use and occupation do not arise under those circumstances.
Triveni Theatres v. R.S. Devakumar, 2001 4 KLJ 412 Cited by petitioner to support the proposition that, after termination, the landlord's remedy is for rent rather than mesne profits/damages (i.e., post-termination possession remains tenancy under K.R.C. Act). The court noted this decision as one relied upon by the petitioner; it formed part of the jurisprudential background supporting the court's conclusion that the plaintiff's claim was, in substance, for rent.
Dhanpal Chettiar v. Yesodai Ammal (Supreme Court) Observed that State Rent Control Acts prevent a landlord from snapping the relationship by mere notice; a person continuing in possession after notice remains a tenant enjoying rights and subject to liabilities such as payment of rent. The court quoted this Supreme Court observation to reinforce the conclusion that giving a quit notice does not render possession unlawful under rent control legislation and that the person continuing in possession remains a tenant under the statute.
Abdul Subhan's case (earlier referred decisions) Earlier view on the definition of 'tenant' under Section 3, which includes a person continuing in possession after termination. The court stated that it reiterated its view expressed in Abdul Subhan's case when construing Section 3(r) to include persons continuing in possession after termination as tenants.

Court's Reasoning and Analysis

The court proceeded by identifying the central statutory provisions and resolving two linked questions: (a) the post-termination status of a person in possession where the K.R.C. Act applies but Part V does not (i.e., non-residential premises with monthly rent exceeding Rs. 500), and (b) which court has jurisdiction to try a suit seeking ejectment and mesne profits/damages or rent.

Step 1 — Interpretation of Section 31 (K.R.C. Act): The court followed the reasoning in B.S. Giridhar and held that Section 31 exempts only Part V (the provisions dealing with control of eviction and obligations of landlords) for the specified class of non-residential premises; it does not exempt those premises from other parts of the Act. The court rejected any construction that would read “Act” in place of “Part V.”

Step 2 — Construction of Section 3(r) (definition of “tenant”): The court reiterated the established view that Section 3(r) includes “a person continuing in possession after the termination of the tenancy in his favour” as a tenant. By applying that definition, the court held that even after contractual termination, statutory tenancy continues under the K.R.C. Act and the person in possession remains a tenant with obligations (notably payment of rent) and rights under the Act. The court relied on the Supreme Court's observations in Dhanpal Chettiar v. Yesodai Ammal to reinforce that a rent control statute prevents the landlord from unilaterally snapping the landlord-tenant relationship by serving notice to quit.

Step 3 — Consequence for mesne profits/damages: Because statutory tenancy continues and the tenant remains liable to pay rent agreed before termination, the court concluded that the question of recovery of mesne profits or damages for use/occupation after termination does not arise in such cases governed by the K.R.C. Act (excepting Part V). The court therefore found the trial court's conclusion (that the tenant was liable to pay mesne profits and that this took the matter outside the jurisdiction of the Court of Small Causes) to be incorrect.

Step 4 — Jurisdiction under the Courts of Small Causes Act: The court examined Section 8 and Section 9 of the Karnataka Courts of Small Causes Act and Article 4 of the Schedule. It noted that suits for possession and for the rent of property that meet the Schedule's conditions (including value not exceeding Rs. 25,000) are cognizable by a Court of Small Causes and that such jurisdiction is exclusive. Given the court's statutory interpretation that the claim in substance was for rent (not mesne profits/damages), the suit fell within the cognizance of the Court of Small Causes where the pecuniary threshold is met.

Conclusion of reasoning: On the combined analysis of the K.R.C. Act (Section 31 and Section 3(r)), the Supreme Court authority cited, and the Courts of Small Causes Act provisions, the court concluded that the plaintiff's suit for damages and mesne profits after termination is, in substance, a suit for recovery of rent. Consequently, jurisdiction lies with the Court of Small Causes (subject to value limits), and the City Civil Court's assumption of jurisdiction was incorrect.

Holding and Implications

Holding: C.R.P. is allowed. The impugned order of the City Civil Court is set aside. It is held that the suit filed by the plaintiffs against the defendant for damages and for mesne profits after the termination of tenancy is in substance a suit for recovery of rent which is cognizable by the Court of Small Causes. As such, the City Civil Court has no jurisdiction to entertain the suit.

Direct implications and consequences: - The trial court's finding that the defendant was liable to pay mesne profits/damages and that this removed the matter from the jurisdiction of the Court of Small Causes was set aside. - The plaintiff's claim (as pleaded) is to be treated as a claim for rent recoverable under the K.R.C. Act; the matter (if within pecuniary limits) is cognizable by the Court of Small Causes. - Parties were directed to bear their own costs.

Note: The summary above is strictly based on the material and reasoning contained in the provided opinion. No information not present in the opinion has been added.

    Ramesh P. Seth v. M.S Krishna Murthy And Another

    Kumar, J.:—

    The plaintiff is the owner of the shop premises which is in the occupation of the defendant as a tenant. The rent of the premises is Rs. 870.00 per month. As the provisions of the Karnataka Rent Control Act are not attracted to the shop in question in view of Section 31 of the said Act the plaintiff got issued a legal notice dated 30.10.1998 terminating the tenancy of the defendant in respect of the leased shop premises and the defendant was called upon to vacate and deliver the vacant possession of the shop premises on the expiry of 30.11.1998 The said legal notice was duly served on the defendant. The defendant admitted the tenancy, the rate of rent. However, he set up a plea of fresh lease for a further period of 15 years and therefore contended that he is not liable to vacant the shop premises. Therefore, the plaintiff was contained to file the Suit O.S No. 9619/1998 on the file of the 14th Additional City Civil Judge Court, Bangalore, for his ejectment and also for a enquiry to be held for determining the mesne profits for the wrongful use and occupation of the shop premises after the termination of the tenancy. The defendant contested the said claim by filing a written statement. In the written statement he admitted the relationship of landlord and tenant, the rate of rent and the receipt of the legal notice but be contended that the lease has been renewed for a further period of 15 years and therefore the plaintiff is not entitled to the decree for ejectment. He also contended that the City Civil Court has no jurisdiction to entertain the suit for ejectment and for mesne profits as it is the Court of Small Causes which has the exclusive jurisdiction to grant the relief sought for. The Court apart from framing other issues framed the issue regarding jurisdiction in the following manner:—

    “Whether this Court has no jurisdiction to try the suit?”

    The said issue was heard as a preliminary issue. The Court on consideration of the rival contentions and also taking note of Section 8 and the Article 4 of the Schedule to Section 8 in the Karnataka Court of Small Causes Act came to the conclusion that though the suit for ejectment and for arrears of rent of less then Rs. 25,000.00 is congnisable by the Court of Small Causes only, as the plaintiff has sought for the relief of mesne profits for use and occupation of the shop premises after the termination of tenancy such a suit is not congnizable by the Court of Small Causes. Further it held as the cause of action for both the reliefs is one and the same, the plaintiff cannot be compelled to file two suits in two different courts for the aforesaid two separate reliefs and in that view of the matter he held the City Civil Court has jurisdiction to grant the relief sought for. Accordingly, he answered the preliminary issue. It is against the said order on additional issue regarding jurisdiction the defendant has preferred this revision.

    2. Sri S.K.V Chalapathy, learned Counsel for the petitioner contends though in respect of non-residential premises, the rent of which exceeds Rs. 500.00 p.m Section 31 of the Karnataka Rent Control Act, 1961, (for short hereinafter referred to as the “K.R.C Act”) makes it clear, Part V of the said Act is not applicable, all the provisions contained in the said enactment except Part V are attracted to the lease in question. Therefore even after termination of tenancy of the defendant by issuing a valid quit notice under Section 106 of the Transfer of Property Act, (for short hereinafter referred to as the “T.P Act’), the defendant continues to be a tenant as defined under Section 3(r) of the K.R.C Act, and what is payable by him to the landlord is the rent agreed prior to the termination and therefore, he does not become a trespasser or a person in unlawful possession or he is liable to pay compensation by way of damages or otherwise. In support of his contention, he relied on a judgment of a Division Bench of this Court in the case of B.S Giridhar… v. P.V Shetty…. . ILR 1984 KAR 1115. and a judgment of this Court in case of Triveni Theatres v. R.S Devakumar . 2001 4 KLJ 412. and contends that in view of the aforesaid declaration of law by this Court, what the plaintiffs would be entitled to from the defendant after the termination of the tenancy is not mesne profits, but rents only. If that is so, whatever the nomenclature adopted by the plaintiff in his prayer columns, the suit will be one for rent and not for either damages or for mesne profits. Therefore, the Small Causes Court has jurisdiction to entertain a suit for ejectment and for rent. The City Civil court has no jurisdiction to entertain the suit and the order passed by the trial Court is illegal and is liable to be set aside.

    3. Learned Counsel for the respondents submitted that once the tenancy is terminated, under the provisions of the T.P Act by issue of a notice under Section 106 of the Act, or the tenancy comes to an end by efflux to time, the tenant's possession would become unlawful. The relationship of landlord and tenant comes to an end and the tenant continuing in possession after termination of the tenancy, will be liable to pay damages for use and occupation, whether it would be called as compensation or as mesne profits. A suit for recovery of mesne profits or damages for use and occupation, is in the nature of suit for recovery of interest in such property and such a suit is excepted from the cognizance of the Court of Small Causes. Therefore, the finding recorded by the Court below is correct and legal and it does not call for interference.

    4. In view of the rival contentions, the question for consideration before me is:

    “To a tenancy to which the Karnataka Rent Control Act applies, however, to which the Part V of the Act does not apply, what would be the position of the tenant after determination of the tenancy either by termination or by efflux of time?”

    5. This question came up for consideration before this Court in the case of B.S Giridhar… v. P.V Shetty…., on a reference, as the earlier judgment of this Court was contrary to the subsequent judgments of the Hon'ble Supreme Court. In the said judgment, it has been held as under:—

    “11. Section 31 of the Act, exempts the operation of Part V, dealing with “control of eviction of tenants and obligations of landlords” to a non-residential premises, whose monthly rent exceeds Rs. 500.00 The said section cannot be read as providing exemptions from the other provisions of the Act, to this class of premises. The immunity is confined to evictions. Section 2(2) of the Act makes it clear that Parts II and III of the Act shall be applicable to the areas in Schedule I and it exempts the buildings constructed after 1.8.1957 for a period of five years. Section 14 pertaining to fixation of fair rent, occurs in Part 111. It applies to all buildings, residential or non-residential, in the areas in Schedule I, except to buildings constructed after 1.8.1957 for a period of five years. This being the only exception, we cannot be implication, introduce another class of exception. Rule of harmonious construction requires that all Section of the enactment must act in their respective spheres and while constructing one provision, violence should not be done to other provisions. Section 31 specifically exempts Part V, to a non-residential building, whose rent exceeds Rs. 500.00 per month. If Mr. Sundarswamy's contention is to be accepted, we will have to read the word ‘Act’ for the words ‘Part V’; in Section 31, then the non-obstante clause in Section 31 would read ‘nothing in this Act shall apply to’ instead of the existing clause ‘nothing in this Part shall apply to’. While interpreting a Section, we cannot be asked to legislate or rewrite a Section. Further, by so doing, we will be adding second exception to Section 2(2) of the Act, which is impermissible. Since the language of Section 31 exempts only Part V and has no application to the other parts in the statute, the interpretation suggested by Mr. Sundarswamy cannot be accepted.

    12. Coming to the definition in Section 3 we reiterate our view expressed in Abdul Subhan's case. The definition mentions three categories of tenants:—

    Firstly, any person by whom or on whose account rent is payable; Secondly, the surviving spouse or any son or daughter or father or mother of deceased tenant who had been living with the tenant in the premises as a member of the tenant's family up to the death of the tenants; and lastly a person continuing in possession after the termination of the tenancy in his favour.

    (underlining by me)

    If follows that notwithstanding the termination of tenancy, the person in possession of the premises would be a tenant and he would be liable to pay rent and exercise the rights given to him, under Section 14 or Section 43 of the Act. His possession would not be unlawful. The fact that under Section 31, one class of tenants are not liable to be evicted under the provisions of the Act, does not take them out of the class of tenants for other purposes. The other rights obligations and liabilities continue to operate, notwithstanding their immunity from eviction, under Part V of the Act. In this context we reproduce the following observations of the Supreme Court in Dhanpal Chettiar v. Yesodai Ammal.

    “…in our opinion, it will suffice to say that the various State Rent Control Acts make a serious encroachment in the field of freedom of contract. It does not permit the landlord to snap his relationship with the tenant merely by his act of serving a notice to quit on him. In spite of the notice, the law says that he continues to be a tenant and he does so enjoying all the rights of a lessee and is at the same time deemed to be under all the liabilities such as payment of rent etc., in accordance with the law”.

    “….Clause (8) expressly says that tenant means “a person continuing in possession after the termination of the tenancy in his favour” Section 3 indicated that no landlord can treat the building to have become vacant by merely terminating the contractual tenancy as the tenant still lawfully continues in possession of the premises. The tenancy actually terminates on the passing of the order or decree for eviction and the building falls vacant by his actual eviction. The giving of the notice, therefore, is a mere surplusage and unlike the law under the Transfer of Property Act it does not entitle the landlord to evict the tenant.”

    6. Therefore, Section 31 of the K.R.C Act exempts the operation of Part V dealing with control of eviction of tenants and the obligation of the landlords to a non-residential building, the monthly rent of which exceeds Rs. 500.00 The said Section does not exclude the application of other Parts and Provisions of the K.R.C Act to the lease in respect of non-residential building the monthly rent of which exceeds Rs. 500.00 In view of the definition of tenant, contained in Section 3(r) of the K.R.C Act, a person continuing in possession after termination of the tenancy in his favour, also would be a tenant. Even after the tenancy of a tenant of a non-residential building the monthly rent of which exceeds Rs. 500.00 terminated, he continues to be a tenant and he is liable to pay the agreed rent to the landlord even after the termination. His possession after the termination of the tenancy would not become unlawful and his liability to pay rent does not cease. With the termination of contractual tenancy, statutory tenancy commences under the KRC Act. Therefore, the question of such a tenant paying damages for use and occupation or compensation for use and occupation of the leased premises after the termination of the tenancy or paying mesne profits does not arise, because of the application of the KRC Act. All the other rights and obligations and the liabilities continue to operate under the KRC Act.

    7. Section 8 of the Karnataka Small Cause Courts Act, 1964, (hereinafter for short referred to as the “Act”) deals with congnizance of suits by Courts of Small Causes. It reads as under:—

    “8. congnizance of suits by Courts of Small causes:—

    (1) A Court of small causes shall not take congnizance of the suits specified in the schedule as suits excepted from the congnizance of a Court of small causes.

    (2) Subject to the exception specified in the schedule and to the provisions of any law for the time being in force, all suits of a Civil nature of which the value does not exceed twenty five thousand rupees shall be congnizable by a Court of small causes.

    Provided that the State Government, in consultation with the High Court, may by notification, direct that all suits of which the value does not exceed twenty five thousand rupees shall be cognizable by a Court of small causes mentioned in the notification.”

    8. Section 9 of the said Act speaks about exclusive jurisdiction of Courts of small causes and reads as under:—

    “9. Exclusive jurisdiction of Courts of small causes:— Save as expressly provided by this Act or by any other law for the time being in force, a suit congnizable by a court of small causes shall not be tried by any other Court having jurisdiction within the local limits of the jurisdiction of the Court of small causes by which the suit is triable.”

    Article 4 of the Schedule to the said Act reads as under:—

    “(4) A suit for the possession of immovable property or for the recovery of an interest in such property but not including a suit for ejectment where-

    (a) the property has been let under a lease or permitted to be occupied, by a written instrument or orally, and

    (b) the court of all causes would be competent to take congnizance of a suit for the rent of the property, and

    (c) the only substantial issue arising for the decision is of the time limited thereby or has been determined by”

    9. A reading of the aforesaid provision makes it clear at a Court of small causes shall have jurisdiction to try all suits of a civil nature of which the value does not exceed Rs. 25,000.00 and which are not excepted from the congnizance of the Court of small causes as contained in the schedule. Article 4(a) and (b) makes it clear that a suit for ejectment where property has been let under a lease or permitted to be occupied by a written instrument or orally and a suit for the rent of the property shall be congnizable by a Court of small cause. Section 9 makes it abundantly clear that a suit cognizable by a Court of small causes shall not be tried by any other Court having jurisdiction of the Court of small causes by which the suit is triable, thereby meaning the City Civil Court in Bangatore has no jurisdiction to try such suits which are cognizable by Court of small causes.

    10. Order 20 Rule 12 CPC which deals with decree for possession and mesne profits reads as under:—

    “12. Decree for possession and mesne profits- (1) Where a suit is for the recovery of possession of immovable property and for rent or mesne profits, the Court may pass a decree-

    (a) for the possession of the property;

    (b) for the rents which have accrued on the property during the period prior to the institution of the suit or directing an inquiry as to such rent;

    (ba) for the mesne profits are directing an inquiry as to such mesne profits;

    (c) directing an inquiry as to rent or mesne profits from the institution of the suit until-

    (i) the delivery of possession to the decree-holder,

    (ii) the relinquishment of possession by the judgment-debtor with notice to the decree-holder through the Court, or

    (iii) the expiration of three years from the date of the decree, whichever event first occurs.

    (2) Where an inquiry is directed under Clause (b) or Clause (c), a final decree in respect of the rent or mesne profits shall be passed in accordance with the result of such inquiry.”

    11. Rule 12(1)(c) makes it very clear that in a suit for recovery of possession of an immovable property and for rent the Court may pass a decree directing an enquiry as to rent from the institution of the suit until the delivery of possession to the decree holder or expiration of three years from the date of decree whichever event first occurs and a final decree in respect of the rent shall be passed in accordance with the result of such inquiry.

    12. Therefore, when the building has been let under a lease or permitted to be occupied by a written instrument or orally, the owner/landlord of the said premises can maintain a suit for ejectment of the tenant of the premises and also claim for rent of the property after the termination of the tenancy if the buildings a non-residential one and the monthly rent of which exceeds Rs. 500.00, such a suit is congnizable by the court of small causes if the value of the subject matter of the suit does not exceed Rs. 25,000.00 and no other Court shall try the said suit except the Court of small causes. Therefore the jurisdiction of Bangalore City Civil Court is ousted. Even though tenancy of a tenant of a non-residential building the monthly rent of which exceeds Rs. 500.00 is terminated, all the provisions of the KRC Act of 1961 are applicable to the said building except Part V of the KRC Act and therefore notwithstanding the termination of tenancy the tenant continues in possession after the termination of the tenancy in his favour and is liable to pay the agreed rent prior to termination. On termination of the tenancy he would not become a trespasser. His possession would not be unlawful. He is not liable to pay any compensation or damages for use and occupation. Notwithstanding the nomenclature adopted by the plaintiff in the suit in his prayer columns what the defendant has to pay is the rent agreed under the terms of the lease even after termination of the tenancy, as the defendant continues to be a tenant in possession of the premises evenafter the termination of the tenancy in his favour.

    13. In that view of the matter, the finding of the learned City Civil Judge that after termination of the tenancy of the defendant he is liable to pay mesne profits which would be in the nature of recovery of interest in immovable property which is excepted from the jurisdiction of the Court of small causes is not correct and accordingly, it is hereby set aside. Hence, I pass the following order:—

    14. C.R.P is allowed. The impugned order is set aside and it is held that the suit filed by the plaintiffs against the defendant for damages and for mesne profits after the termination of the tenancy is in the nature of a suit for recovery of rent which is cognizable by the Court of Small Causes. As such, the City Civil Court has no jurisdiction to entertain the suit.

    Parties to bear their own costs.

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    Comments

    Ramesh P. Seth v. M.S Krishna Murthy And Another
    (Sep 5, 2001)