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Case Summary — Judgment of Gopal Rao Ekbote, J.

Factual and Procedural Background

The petitioner (respondent below) was the proprietor of M/s. Sree Raja Rajeswari Talkies, Warangal; the premises owner (appellant in this appeal) was a third respondent in the writ petition. The premises were first let orally and later by a registered lease deed dated 16 May 1964 for three years ending 30 April 1967. On 29 December 1966 the petitioner applied for renewal of the cinema licence for one year (ending 29 February 1968). Temporary licences were granted during pendency.

The 3rd respondent (owner) applied on 8 March 1967 seeking to run the theatre himself and contended licence should not be renewed beyond the lease expiry (30 April 1967). The Collector informed the petitioner by letter dated 21 March 1967 that she was not entitled to renewal from 1 May 1967 because the lease expired.

The petitioner appealed to the State Government; appeal was rejected on 29 May 1967. The petitioner filed Writ Petition No. 1099 of 1967 which was allowed on 6 July 1967, setting aside orders of respondents 1 and 2 and directing the 2nd respondent to hear parties on the 29 December 1966 application, on the basis that the Collector's 21 March 1967 letter was a notice and not a final order.

The petitioner applied on 15 July 1967 for a temporary licence; that petition was dismissed on the ground that she was not in lawful possession, leading to Writ Petition No. 1408 of 1967 which was withdrawn and dismissed.

The Collector, by order dated 27 July 1967, rejected the petitioner's renewal application on two grounds: (1) the lease had expired and the Rent Act did not apply so petitioner was not in lawful possession; (2) non-compliance with rule 39 of the Rules under the Cinema Act. The Government rejected the appeal by a brief order dated 4 August 1967.

The High Court (Vaidya, J.) allowed the writ petition impugning the Government's order, holding that the cinema hall constituted a "building" within the Andhra Pradesh Buildings (Lease, Rent and Eviction Control) Act, and that the petitioner continued to enjoy protection under that Act despite lease expiry; further, the High Court considered that insufficient time had been granted to rectify defects and ultimately declared the petitioner entitled to licence renewal if defects were rectified within a reasonable time to be granted by the licensing authority.

The Collector's and Government's orders were then challenged by the owner in this appeal.

Legal Issues Presented

  1. Whether the Andhra Pradesh Buildings (Lease, Rent and Eviction Control) Act ("the Act") applies to the cinema premises (i.e., whether the cinema hall falls within the definition of "building").
  2. If the Act applies, whether the petitioner continued to be in lawful possession of the premises despite the lease period having expired.
  3. Whether the High Court was correct in deciding entitlement to licence renewal itself (rather than remitting the matter to the licensing authority or appellate Government), i.e., the extent to which the Court may review or substitute its own decision for that of administrative/licensing bodies.

Arguments of the Parties

Appellant's Arguments

  • The dominant intention of the parties was to lease the "cinema business" and not the "cinema hall" as an accommodation; therefore the building would not fall within the definition of "building" under the Rent Act.
  • Reliance was placed on the Supreme Court decision in Uttamchand v. S.M. Lalmani (A.I.R. 1965 S.C. 716) where fixtures were held to be the primary object of the lease and thus the lease did not cover accommodation to which the Act applied.

Petitioner's (Respondent's) Arguments

  • The cinema hall is a "building" within section 2(iii) of the Andhra Pradesh Act because the Act's definition includes furniture supplied or fittings affixed by the landlord for use in such building; presence of such fittings suffices to bring the premises within the Act.
  • The petitioner continued to enjoy protection under the Act despite the expiry of the lease; consequently the Collector and Government were wrong to deny renewal on the ground of lease expiry.
  • The licensing authority/other authorities did not grant reasonable time for rectification of defects; therefore renewal should not have been refused without giving adequate time.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Uttamchand v. S.M. Lalmani, A.I.R. 1965 S.C. 716 Held that where fixtures (machinery) were the primary object of a lease (a 'dal' mill), the lease was not for "accommodation" under the relevant Rent/Accommodation Control Act; the test applied was whether fixtures were for more beneficial enjoyment of the building. The court distinguished this decision on its facts and on differing statutory language. It found the Madhya Pradesh provision analyzed in Uttamchand materially different from the Andhra Pradesh Act: the Andhra Pradesh definition (clause (b)) is wider and requires only that furniture or fittings be supplied/affixed and let along with the building to bring the premises within the Act. Thus Uttamchand was not followed as binding on the present facts.
Karnani Properties Limited v. Miss Augustine & Others, (1957 S.C.J 177; 1957 S.C.R 20; A.I.R. 1957 S.C. 309) Interpreted a definition of "premises" including fittings/furniture; held that provision is wide and supply of amenities or fixtures does not take premises out of the Act; the Act should be given widest application within its terms. The court followed this Supreme Court decision as directly in point and holding that the presence or supply of furniture/fixtures brings the premises within the Act. This authority fortified the court's conclusion that the Andhra Pradesh Act applied to furnished cinema halls.
K. Kungu Govindan v. Parakkat Kunhilekshmi Amma (Full Bench, Kerala) Kerala Act included furnished cinema halls within ambit; the Full Bench distinguished Uttamchand on similar grounds and applied the wider statutory language to include furnished cinema halls. The court treated this Full Bench decision as persuasive and in pari materia with the Andhra Pradesh Act, supporting the view that furnished cinema halls fall within the Act's definition and are covered by its protections.

Court's Reasoning and Analysis

The court's analysis proceeded in these principal steps:

  1. Statutory definition: The court examined the definition of "building" in section 2(iii) of the Andhra Pradesh Act, which includes any house or part of a house let separately for residential or non-residential purposes and expressly includes "any furniture supplied or any fitting affixed by the landlord for use in such house or hut or part of a house or hut." The court emphasized that clause (b) uses language broad enough that the mere presence of such fittings or furniture, let along with the premises, suffices to bring the premises within the Act.
  2. Distinguishing Uttamchand: The court considered the appellant's reliance on Uttamchand v. S.M. Lalmani but found that the Madhya Pradesh provision there used different language (focusing on fittings affixed "for the more beneficial enjoyment" of the building). In Uttamchand the fixtures were the primary object of the demise, so the lease was not for accommodation. Because the Andhra Pradesh statute's clause (b) is wider and does not require the fittings to be for "more beneficial enjoyment," the court distinguished Uttamchand and declined to apply its test.
  3. Following contrary authorities: The court relied on Karnani Properties Ltd. v. Miss Augustine (Supreme Court) where the definition of "premises" included furniture/fittings, and the Court there rejected the argument that provision of amenities should exclude premises from the Act. The court also relied on the Full Bench Kerala decision in K. Kungu Govindan v. Parakkat Kunhilekshmi Amma, which reached a similar result and distinguished Uttamchand. These authorities supported a wide application of the Act to furnished premises such as cinema halls.
  4. Conclusion on applicability: On that basis the court held that the cinema hall and its fittings fell within the Act's definition of "building," so the relationship of landlord and tenant continued despite the lease's expiry, and eviction would only be available on grounds specified in section 10 of the Act. The Collector therefore erred in holding that the landlord-tenant relationship did not subsist after lease expiry.
  5. Rule 39 and remedial relief: The court agreed with the High Court's conclusion that the Collector's finding regarding non-compliance with rule 39 was incorrect, and accordingly upheld that part of the High Court judgment.
  6. Limits of judicial review vs. appellate jurisdiction: The court then analysed the proper scope of the High Court's powers. It reiterated the distinction between judicial review (supervisory jurisdiction assessing legality/jurisdictional vires) and an appeal on merits. The High Court may quash decisions that are ultra vires, arbitrary or lacking jurisdiction, but should not substitute its own merits decision where the statute confers appellate jurisdiction on another authority (here, the Government).
  7. Application to the present orders: The court found the High Court was right to quash orders that were bad in law (Collector and Government orders as they stood), but held that the High Court should not have proceeded to decide the licence question itself. If the Government's order were quashed for being non-speaking, the appeal would have to be remitted to the Government to decide in accordance with law. However, because the court considered the Government's order to be an affirmative order agreeing with the Collector, and both were bad in law on the applicability point and rule 39, it was appropriate to quash both orders but to direct the Collector (licensing authority) to dispose of the renewal application afresh in accordance with law, keeping in view the court's conclusions.

Holding and Implications

HOLDING: The court allowed the appeal in part. It held that the Andhra Pradesh Buildings (Lease, Rent and Eviction Control) Act applies to the cinema premises in question; the landlord-tenant relationship subsists despite expiry of the lease; the Collector was wrong in holding otherwise; and the High Court was correct in upholding that rule 39 was not correctly applied against the petitioner. The court quashed the orders of the Collector and the Government.

IMPLICATIONS / DIRECT EFFECTS:

  • The orders of the Government and the Collector rejecting renewal of licence are quashed.
  • The Collector (licensing authority) is directed to dispose of the petitioner's application for renewal of licence in accordance with law and with regard to the conclusions reached by this Court (i.e., that the Act applies and the petitioner enjoys protections under it), and to grant any reasonable time for rectifying defects as appropriate.
  • The High Court's order was modified to the extent that the High Court should not itself decide the licence entitlement on merits; instead the matter is remitted for fresh consideration by the Collector in accordance with law.
  • No costs were ordered in the circumstances.
  • The decision follows and applies existing precedent rather than announcing a new legal principle beyond the application of the cited authorities.

Disposition: Appeal allowed in part.

    S. Ramanathan v. Smt. P. Seeta Maha Lakshmi And Others

    Gopal Rao Ekbote, J.:— This is an appeal directed against the order of our learned brothers Vaidya, J., made in Writ Petition No. 1722 of 1967 whereby the learned Judge allowed the writ petition and quashed the orders of the Collector, and the Government and declared that the petitioner is entitled to renewal of a licence if the defects pointed out by the various authorities and rectified by her within a reasonable time to be granted by the licensing authority.

    2. The material facts are that the petitioner who is the respondent herein is the proprietor of M/s. Sree Raja Rajeswari Talkies, Warangal. The owner of the premises, however, is the appellant who was the 3rd respondent in the writ petition. The premises were originally leased out to the petitioner on an oral basis. Later on a registered lease deed was executed on 16th May, 1964, for a period of three years ending with 30th April, 1967. On the 29th of December, 1966 the petitioner applied for the renewal of the licence for one year ending with 29th February, 1968. During the pendency of the said petition, temporary licences were granted to her.

    3. The 2nd respondent intimated to the Collector by his letter dated 14th March, 1967 that the 3rd respondent also had submitted an application on 8th March, 1967 to the effect that he being the owner of the premises wants to run the theatre for himself, and that licence should not be granted to the petitioner, beyond the period of lease which expired on 30th April, 1967. The Collector, Warangal, therefore, informed the petitioner by his letter dated 21st March,. 1967 that she was not entitled, for the renewal of the licence with effect from 1st, May, 1967 as, the lease period expired on 30th April, 1967.

    4. Dissatisfied with that order, the petitioner carried the matter in appeal to the State Government which was however rejected on 29th May,. 1967.

    5. The petitioner therefore filed Writ Petition No. 1099 of 1967. That writ petition was allowed on 6th July, 1967. The orders of respondents 1 and 2 were set aside and the 2nd respondent was directed to hear the parties and dispose of the application dated 29th December, 1966. It was held that, the letter written by the Collector on 21st March, 1967 was merely a notice and not a final order under the relevant Act.

    6. The petitioner thereafter made an application on 15th July, 1967 for a temporary licence. This petition was dismissed on the ground that the petitioner was not in lawful possession of the premises. Aggrieved by that order she filed writ petition No. 1408 of 1967. In view of the subsequent events that petition was withdrawn and it was dismissed.

    7. The Collector by his order, dated 27th July, 1967 rejected the petitioner's application for renewal of licence. He did it merely on two grounds the first ground being that the lease period has expired, and as the Rent Act does not apply to the present case, the petitioner is not in lawful possession of the building and, therefore, is not entitled to any licence. The second ground was that the petitioner has not complied with the requirements of rule 39 of the Rules made under the Cinema Act.

    8. The petitioner aggrieved by that order preferred appeal to the Government. The Government in a brief order, dated 4th August, 1967 rejected the appeal. It is this order that was impugned in the writ petition out of which this appeal arises.

    9. The learned Judge agreed with the contention of the petitioner that the ‘cinema hall’ comes within the definition of a ‘building’ and consequently the Andhra Pradesh Buildings (Lease, Rent and Eviction Control) Act, (hereinafter called the Act) applies to the facts of the case the result of which was that inspite of the expiry of lease period the petitioner continued as a tenant with the protection thrown round her by the Act. The learned Judge also agreed with the petitioner that sufficient time was not granted to her to remove the defects by granting some reasonable time to her. The learned Judge felt:—

    “………… The Government's order will have to be quashed only on the ground that it is not a speaking ord;r and the Government directed to dispose of the appeal according to law. Bat having held that the lease deed attracts the provisions of the Rent Control Act and that the licence could not have been rejected because of non-compliance of rule 39, it will be futile to send back the case to the Governnent for its decision.”

    10. The learned Judge therefore ultimately declared the petitioner entitled to a renewal of the licence if the defects pointed out by the various authorities are rectified by her within a reasonable time to be granted by the licensing authority.

    11. It is this view that is now assailed in this appeal.

    12. The main question involved in the appeal is whether the Act is applicable to the facts of the present case, and if so, whether the petitioner continued to be in lawful possession of the suit premises inspite of the period of lease having expired.

    13. The term ‘Building’ is defined in section 2 (iii) of the Act. It reads:—

    “……………. ‘Building’ means any house or hut or part of a house or hut let or to be let separately for residential or non-residential purposes and includes:—

    (a) the gardens, grounds, garages and outhouses, if any appurtenant to such house, hut or part of such house or hut and let or to be let along with such house or hut or part of such house or hut;

    (b) any furniture supplied or any fitting affixed by the landlord for use in such house or hut or part of a house or hut. But does not include a room in a hotel or boarding house.”

    14. The contention of the learned advocate appearing for the appellant was that the dominant intention of the parties to the lease was to lease out the ‘cinema business’ and not the ‘cinema hall’ and therefore the building in question would not come within the definition of ‘building.’ In support of this contention reliance was placed on a decision of the Supreme Court in Uttamchand v. S.M Lalmani . A.I.R 1965 S.C 716.. In that case a ‘dal’ mill building with fixed machinery in sound working order and assessories was leased out on an annual rent. The intention of the lessee in accepting the lease was to use the building as a ‘dal’ mill. The question was whether the ‘dal’ mill was an accommodation within the meaning of section 3 (a) of the Madhya Pradesh Accommodation Control Act, 1955, and whether the Rent Control Authority had jurisdiction to determine the standard rent.

    15. The relevant portion of section 3 of that Act which fell for their Lordships consideration defines the relevant terms used in the Act including the term ‘accommodation.’ Section 3 (a) defines ‘accommodation’ as meaning:

    (x) ***

    (y) any building or part of a building and it includes

    (1) ***

    (2) ***

    (3) any fittings affixed to such building or pan of a building for the more beneficial enjoyment thereof.

    16. It is in the light of this provision that the material clauses of the lease were considered. It was found that the dominant part of the demise and the purpose for which the building was constructed and let out was to run the ‘dal’ mill. In view of the language employed in section 3 (a) it was held that the fixtures described in the schedule to the lease are in no sense intended for the more beneficial enjoyment of the building. The fixtures were the primary object which the lease was intended to cover, and the building in which the fixtures were located come incidentally. Consequently their Lordships agreed with the view taken by the High Court that the rent which the appellant had agreed to pay to the respondent under the document in question could not be said to be rent payable for any accommodation to which the Act applies.

    17. The language of section 3 (a) which was considered by their Lordships of the Supreme Court is materially different from the language employed while defining the term Building.’

    18. In the Act with which we are’ concerned, the language used as ‘any furniture supplied or any fittings affixed by the landlord for use in such House or hut or part of a house or hut.’ The test is therefore not whether those fittings which are found in the house were meant for more beneficial enjoyment of the house or not. If those fittings are found to be in the house, that is enough to bring the case within the purview of the definition of ‘building.’ The phrase used in clause (b) is much wider. The decision of the Supreme Court, therefore can be distinguished on this ground alone. The law that was interpreted there cannot be said to be in pari materia with the law which we are considering in this case. In our view, the furniture supplied or any fittings affixed by the landlord in the present case and let out along with the cinema hall, the entire thing comes within the definition of ‘building’ and consequently the provisions of the Act would govern the relationship of landlord and tenant, the result of which is that although the term of the lease deed has expired, the landlord, would not be in a position to evict the tenant, except for any one of the grounds mentioned in section 10 of the Act. The relationship of landlord and tenant till then continues. The Collector with whose opinion the Government seems to have agreed, clearly went wrong in holding that after the expiry of the lease, the relationship of landlord and tenant did not subsist and that the provisions of the Act are not applicable to the facts of the present case.

    19. We are fortified in our view by a decision of the Supreme Court, in Karnani Properties Limited v. Miss Augustine & Others. That was a case from West Bengal. The word used in that Act is ‘premises’ which carries the same meaning as the word building’ employed in our Act. The defiition of ‘premises’ contained in the relevant section 2 (8) was as follows:

    “Premises means any building or part of a building or any hut or part of a hut let separately and includes.

    (a) ***

    (b) Any furniture supplied or any fittings affixed by the landlord for use of the tenant in such building or part of a building or hut or part of a hut.”

    20. It will immediately be seen that the provision is in pori materia with the provision with which we are concerned in this case. Their Lordships held:

    “Under this head the question reduces itself to this, whether if by a stipulation between the landlord and the tenant the landlord agreed to provide additional amenities like electric power for consumption and such other facilities the case is taken out for the operation of the Act. The Act is intended to make better provision for the control of rents of premises’ It has defined ‘Premises’ in very wide terms as pointed out above. Hence it is difficult if not impossible to accept the contention that the Legislature intended the provisions of the Act to have a limited application depending upon the terms which an astute landlord may be able to impose upon his tenants. In order fully to give effect to the provisions of the Statute, the Court has to give them the widest application possible within the terms of the Statute. Having those considerations in view, we do not think that the supply of the amenities aforesaid, would make any difference to the application of the Act to the premises in question.”

    21. To the same effect is a Full Bench decision in K. Kungu Govindan v. Parakkat Kunhilekshmi Atnma. It is true that in the Kerala Act, the preamble makes it clear that a provision has been made to include the cases of furnished cinema halls witihn the ambit of that Act which in our view does not make any difference. The language of the Kerala act is in pari materia with the provisions of the Andhra Pradesh Act. The Kerala High Court also distinguishid the decision of the Supreme Court in Uttamchand v. S.M Lalwan . A.I.R 1965 S.C 716., on the same lines as we have done above.

    22. Respectfully following the decision of the Supreme Court in Karnani Properties Limited v. Miss Augustine & Others . 1957 S.C.J 177; 1957 S.C.R 20; A.I.R 1957 S.C 309., and the Full Bench case in K. Kungu Govindan v. Parakkat Kunhilekshmi Amma, we hold that the provisions of the Act apply to the present case and that the relationship of landlord and tenant subsists inspite of the fact that the lease period has expired. The Collector, therefore was wrong in holding that such a relationship did not exist between the parties. The learned Judge also has held the same view and we do not find any valid reason to disagree with it.

    23. It was not seriously disputed before us that the conclusion reached by the learned Judge in regard to compliance or otherwise of rule 39 is not correct. We therefore uphold that part of his Judgment also.

    24. What remains to be considered is whether the learned Judge, was right in deciding the question whether the petitioner should get licence or not without allowing the licensing authority to decide the question.

    25. Tbe crucial question is to what extent the Courts will review the merits of the exercise of a statutory power or discretion which is not made subject to the appeal to the Courts. All that the Court can do in such cases is that the power which the Tribunal has claimed to exercise is one which falls within the four corners of the powers given by the Legislature and to see that those powers are exercised in good faith. Apart from that the Courts cannot substitute its own order on merits. The Court should decline to retry the issue as if it is an appeal to Court The Courts should not arrogate to themselves a quasi-original or appellate jurisdiction where none has been conferred upon them. If these are vitiating circumstances all that the High Court can do is to quash the order in exercise of their supervisory jurisdiction. That is not however done in the exercise of the appellate jurisdiction. That jurisdiction has been conferred upon the Government. The Government was empowered to determine the matter de novo and to substitute its own opinion for that of the licensing authority. This Court while it will continue to assert its supervisory jurisdiction will not assume an appellate jurisdiction that Legislature has abstained from vesting in it. It must be borne in mind that the system of Judicial Review is radically different from a system of appeals though it is easy to confuse them, and sometimes they appear to overlap. The distinction between the two however is real and substantial. An appeal means that some superior Court or Tribunal has power to reconsider the decision of a lower tribunal on its merits. Review on the other hand is based not on the merits but on the legality of the lower authorities proceedings. At the root of such matter is jurisdiction or more simply power. If an administrative authority is acting within its jurisdiction or intra vires and no appeal to the High Court from it is provided by statute then it is immune from control by a High Court. But if it exceeds or abuses its powers, so that it is acting ultra vires then the High Court can quash its decision by declaring it to be legally invalid. It is within this limit that the judicial review has to confine itself;

    26. Having taken the view that the Tribunal had gone wrong in holding that the Act is not applicable to the present case and that rule 39 is not violated, the correct course would have been to quash the orders of the Government as well as of the Collector, as the learned Judge, was inclined to do. But the only direction which could have been given to the licensing authority after the orders are quashed, was that it should decide the matter in accordance with law keeping in view the conclusion arrived at by this Court. It is not the function of this Court to sit in appeal, and decide the matter here. The learned Judge thought that the order of the Government was a bald order and was not a speaking order. If that was the view then the Government's order should have been quashed, and the Government be allowed to decide the appeal before it in accordance with law. But, after going through the Judgment of the learned Judge we find that apart from quashing the order of the appellate authority i.e; the Government the learned Judge has also quashed the order of the Collector. Once the order of the Collector is quashed, there does not remain anything which can be decided in appeal by the Government. As stated above, if the Government's order were to be quashed on the ground that it was not a speaking order, then the matter would have to go to the Government for the disposal of the appeal in accordance with law. How we view the order of the Government however is that it is an affirmative order agreeing with the view taken by the Collector. It may therefore, not be insisted that the Government should give reasons for agreeing with the view taken by the Collector. If that is so and this Court takes the view that the order of the Collector with which the Government has agreed, which is bad in law then the learned Judge was right in quashing both the orders. It is for the Collector in the peculiar circumstances of the case to decide as to whether renewal of licence can be granted in accordance with law. We would therefore allow this appeal partly and modify the order of the learned Judge only to the extent it decided the matter here and uphold the view that the orders of the Government as well as the Collector be quashed. The Collector is directed to dispose of the application for renewal of licence in accordance with law and keeping in view the decision of this Court.

    27. The appeal is allowed accordingly, in the circumstances however to we make no order as to costs.

    28. Appeal allowed in part.

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    S. Ramanathan v. Smt. P. Seeta Maha Lakshmi And Others
    (Dec 8, 1969)