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Vudathu Venkataratnam And Others v. Mutha Sarvarayudu And Others

Andhra Pradesh High Court
Sep 21, 1962
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Structured Summary of the Opinion

Factual and Procedural Background

This revision petition arises from an order of the District Judge, East Godavari dated 4th August, 1960.

The material facts are:

  • On 8-2-1958 the landlords (respondents) filed a petition before the House Rent Controller, Kakinada for eviction of the tenant from a site and a building thereon on two grounds: (i) the landlords required the premises for the purpose of running a cinema house, and (ii) the tenant committed nuisance by encroaching on an adjoining site.
  • The tenant defended on the basis that the landlords were not carrying on the business of running a cinema house at the time of the petition and that he had not committed any nuisance.
  • The Rent Controller, after recording evidence, dismissed the landlords' petition holding that the landlords were not carrying on the business of running a cinema house and that the tenant had not committed nuisance.
  • The landlords appealed to the Subordinate Judge, who found for the landlords on both grounds and directed eviction.
  • The tenant then filed a revision petition before the District Judge, East Godavari, which the District Judge dismissed and thereby affirmed the Subordinate Judge's decision.
  • The present revision petition is directed against the District Judge's order of 4th August, 1960.

Legal Issues Presented

  1. Whether the landlords fall within the expression "is carrying on a business" in section 7(3)(a)(iii) of the Madras Buildings (Lease and Rent Control) Act, 25 of 1949, where they had taken steps and obtained permissions to run a cinema but had not yet actually commenced operations at the time of filing the eviction petition.
  2. Whether the fact that a later Act (1960) specifically added sub-clause (b) ("for the purposes of a business which the landlord bona fide proposes to commence") implies that the earlier Act (1949) did not cover bona fide preparations to commence a business and therefore the earlier Act should be read narrowly.

Arguments of the Parties

Petitioner's (Tenant's) Arguments

  • The District Judge erred in holding that the landlords were "carrying on business" within the meaning of section 7(3)(a)(iii) because the landlords only intended to start the cinema in the future and had not already commenced the business.
  • Reliance was placed on Chowdhary Bakar Hussain v. Mowlvi Saheb (1956) An. W.R. 498 to support the proposition that having only applied for a licence before filing for eviction does not constitute "carrying on business".
  • The petitioner argued that the 1960 amendment, which expressly added a provision for businesses the landlord "bona fide proposes to commence", shows that the earlier Act did not cover the present situation and therefore the earlier wording should be construed narrowly.

Respondents' (Landlords') Position as Reflected in the Opinion

  • The landlords had taken preparatory and bona fide steps before filing the petition: they obtained requisite permission from the District Magistrate and collected necessary material for erecting the cinema prior to filing the petition in 1958.
  • On those facts the landlords were held to fall within the phrase "is carrying on a business" as interpreted by prior judicial decisions, i.e., bona fide preparations and steps to commence the business suffice.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Chowdhary Bakar Hussain v. Mowlvi Saheb (1956) An. W.R. 498 Held that where the landlord had only applied for the issue of a licence before filing for eviction, he could not be considered to be "carrying on business" (Umamaheswaram J.). The Court treated this decision as narrow and fact-specific and noted that the judge in that case declined to extend an earlier broader principle to its facts; it did not displace the prior test adopted in earlier authorities.
N. Narasimha Rao v. Sakala Virabhadra-swami (1955) A.L.T. 580 (Viswanatha Sastry, J.) Developed a broader test: "carrying on business" may include cases where the landlord has obtained licences and made bona fide preparations to commence business; business may encompass preparatory stages not visible to outsiders. The Court relied on this reasoning as laying down the applicable test: bona fide preparations and steps towards starting the business can make the expression applicable.
P.K. Kesavan Nair v. C.K. Babu Naidu (1954 Mad. 892) Observed that "business" includes every trade, occupation and profession; "carrying on business" implies repetition or series of acts and must be read in context with the object of the Act. The Court cited this case for the proposition that the phrase has varying import and should be construed with reference to the statute's purpose; factual acts like constructing premises and shifting machinery can show carrying on business.
K.S. Nataraja Achari v. J.K. Balasubramaniam (1957-II M.L.J. 492) Listed among decisions supporting the broader interpretation that bona fide preparations to commence business suffice. Cited as consistent authority reinforcing the test that preparatory steps and bona fide arrangements fall within section 7(3)(a)(iii).
S. Kazimuddin Sahib v. Rangaswami Pillai (1958-II M.L.J. 389) Another authority consistent with the view that necessary preparations and bona fide steps amount to "carrying on business". Relied on as corroborative authority; used to show consistent judicial interpretation in favour of the broader construction.
Kikabboy v. I.T. Commissioner (1950 Bom. 6 at 9) Principle that when a Legislature amends language of a statute it does not necessarily follow that it intended to change substantive law; amendments are often made to clarify ambiguities. Applied to reject the petitioner's submission that the 1960 amendment showed the earlier Act did not cover bona fide proposed businesses; the Court held the amendment more plausibly clarified existing judicial interpretation.

Court's Reasoning and Analysis

The Court proceeded by examining the wording of section 7(3)(a)(iii) of the Madras Buildings (Lease and Rent Control) Act, 25 of 1949, and surveying relevant judicial authorities construing the phrase "is carrying on a business".

Key steps in the Court's analysis (as recorded in the opinion):

  1. The Court acknowledged that the wording of the provision is somewhat unhappy or ambiguous, but turned to judicial interpretation to ascertain its meaning.
  2. The Court reviewed a series of authorities. It noted that Viswanatha Sastry, J. (in N. Narasimha Rao) had taken a broad approach: the phrase "carrying on business" may include cases where a landlord has obtained licences and engaged in bona fide preparatory acts, even if visible trading activity has not yet commenced.
  3. The Court summarized the test from that line of authority: the landlord need not already be operating the business elsewhere; if he has made bona fide preparations and taken necessary steps to commence the business (for example obtaining licences, procuring materials, erecting premises, shifting machinery), the phrase applies.
  4. The opinion distinguished Chowdhary Bakar Hussain as a narrower, fact-specific decision in which the landlord had only applied for a licence and the earlier broader principle was not extended; the Court did not view that decision as displacing the broader test.
  5. Applying the broad test to the facts, the Court found that the landlords had obtained requisite permission from the District Magistrate and collected necessary material to erect the cinema before they filed the petition in 1958; these were bona fide preparatory steps.
  6. The Court addressed the argument based on the 1960 amendment (which expressly added sub-clause (b) providing for a business "which the landlord bona fide proposes to commence"), and rejected the inference that the earlier Act did not already cover such cases. The Court explained that amendments can be made to clarify existing judicial interpretation; absent a clear indication that the Legislature intended a substantive change, the amendment may be read as confirming or clarifying prior law.
  7. On that basis the Court concluded that the District Judge correctly held that the landlords satisfied the conditions of section 7(3)(a)(iii) and that the eviction petition had rightly been allowed on the ground of bona fide requirement to carry on the business (cinema).

Holding and Implications

Revision Petition Dismissed with costs.

Direct consequences for the parties (as ordered in the opinion):

  • The District Judge's order affirming the Subordinate Judge's eviction order was upheld.
  • The petitioner (tenant) was ordered to vacate the premises within one month from the date of the judgment; failure to vacate would result in execution of the order.

Broader implications discussed by the Court (limited to what appears in the opinion):

  • The Court expressed that the uniform judicial interpretation (from High Courts cited) treating bona fide preparations and necessary steps as amounting to "carrying on business" has been consistently applied since the 1950s, and the 1960 legislative amendment more plausibly clarifies that judicial interpretation rather than introducing a new rule.
  • The opinion does not announce a novel legal principle beyond applying the established tests; it treats the decision as an application of already existing judicial interpretation to the facts at hand.

Note: This summary is strictly confined to the facts, arguments, authorities and conclusions expressly stated in the provided opinion.

Show all summary ...

1. This revision petition is from an order of the District Judge, East Godavari dated 4th August, 1960.

2. The facts necessary for our purpose are that the land-lords, who are the respondents here, filed a petition on 8-2-1958 for eviction of the tenant before the House Rent Controller, Kakinada of a site and a building thereon on two grounds; firstly that the landlords required the premises for the purposes of running a cinema house and secondly that the tenant committed nuisance by encroaching on a site adjoining to the suit premises. The tenant set up a defence that the landlords are not carrying on any business of running a cinema house at the time of the petition and that he has not committed any nuisance so as to make him liable for eviction,

3. The Rent Controller after recording the evidence dismissed the petition holding that the landlords are not carrying on business of running a cinema house and that the tenant has not committed any act of nuisance. The land-lords therefore went in appeal before the Subordinate Judge, who found on both the grounds against the tenant and directed eviction. Aggrieved by that order of the learned Subordinate Judge, the tenant went in revision before the District Judge, East Godavari, who dismissed the revision petition and affirmed the decision of the Subordinate Judge. This revision petition is directed against the said order of the District Judge.

4. The only contention which is pressed on me by the learned Advocate for the petitioners is that the District Judge has erred in holding that the landlords are Carrying on business of running a cinema house within the meaning of section 7 (3) (a) (iii) of the Madras Buildings (Lease and Rent Control) Act, 25 of 1949, herein after called as the Act. In order to appreciate this contention it is necessary to look into section 7 (3) (a) (iii) which is in the following terms:—

“7 (3) (a): A landlord may, subject to the provisions of clause (d) apply to the controller for an order directing the tenant to put the landlord in possession of the building………………

(iii) in case it is any other residential building, if the landlord is not occupying for purposes of a business which he is carrying on, a nonresidential building in the city, town or village concerned which is his own to the possession of which he is entitled whether under this Act or otherwise.”

5. It is urged before me that the landlords cannot be taken to be carrying on the business of running a cinema within the meaning of section 7 (3) (a) (iii) as they are intending to start in future the cinema house. Reliance is placed on a decision of this Court in Chowdhary Bakar Hussain v. Mowlvi Saheb (1956) An. W.R 498. After pointing out that the wording of the above said provision is unhappy, Umamaheswaram J., held on the facts of that particular case that as the landlord had only applied for the issue of a licence before he filed the petition for eviction, he cannot be considered to be carrying on business. The learned Judge referred to an earlier decision of this Court N. Narasimha Rao v. Sakala Virabhadra-swami (1955) A.L.T 580, and thought it unnecessary to decide in that case whether the wide construction placed by Viswanath Sastri J., on the phrase ‘carrying on business’ is correct or not. The learned Judge merely declined to extend the principle laid down in the earlier decision to the facts of the case before him. This case therefore does not by itself decide any thing with regard to the wording of ‘is carrying on business’ occurring in section 7 (3) (a) (iii) of the Act. It is manifest that the principle laid down in the earlier decision therefore remains unshaken. In that earlier case Viswanatha Sastry, J., said:

“The pharse ‘carrying on business’ has no fixed connotation and its meaning and effect have to be ascertained from the context in which it is used, the nature of the business and the transaction incidental to it. If a dealer carrying on whole sale business in cloth has also obtained the necessary license and quota for carrying on retail business in cloth Page: 57and all that remains for him is to remove the cloth from his wholesale shop into the retail shop and begin to sell the cloth, he has started his business operations and section 7 (3) (a) (iii) applies to such a case. There is no yardstick by which we can measure the range of activities necessary to constitute the carrying on of a business. A business may take some time for its being organised and set on foot as a trading venture …………… In business, as in professions, there are initial stages and periods when there is very little activity visible to outsiders but nevertheless, the business or profession is regarded as bring carried on. The contention of the respondent would lead to this result that a wholesale dealer in cloth who wants to carry on retail cloth business in another shop as required by the rules would have to take out a shop on rent for sometime, stock his goods there and sell them in the rented premises before he can claim to get possession of his own premises for the retail business. This is hardly a result which could have been contemplated by the Legislature. If there is no bona fide preparation for running the business, then of course it is open to the court to say that the demand for eviction is unjustified. Here, however, the facts tell the other way……………. The wording of the relevant provision is no doubt some what unhappy and it would have been better if the words ‘for purposes of carrying on a business’ had been used instead of the words ‘for purposes of a business which he is carrying on’. Even on the language of the clause as it stands, it can be said that the petitioner requires his building for a business which he is carrying on.”

6. The test which appears to have been thus laid down in this case is that although the landlord may not actually carry on the business, but if he obtains a licence and makes all necessary preliminary arrangements to carry on the business, it will fall within the ambit of section 7 (3) (a) (iii) of the Act.

7. Even prior to the abovesaid decision of Viswantha Sastry, J., Ramaswami, J., in P.K. Kesavan Nair v. C.K. Babu Naidu 1954 Mad. 892, considered the abovesaid phrase and observed:

“The term ‘business’ includes every trade, occupation and profession. The ward ‘business’ has no technical meaning, but is to be read with reference to the object and intent of the Act in which it occurs. The term ‘business’ means an affair requiring attention and care; that which busies or occupies one's attention and labour as his chief concern; mercantile pursuits; that which one does for a livelihood, occupation, employment.”

8. The learned Judge continued:

“The pharse ‘carrying on business’ implies a repetition or series of acts. This pharse is in itself one of varying import according to as it is construed with an implied addition, so as to make it mean the whole business, the principal part of the business, any part of the business or that part of the business which may properly be supposed to have been contemplated. It has in the English Courts been interpreted according to the context and the apparent purpose of the Legislature.”

9. The facts of that case are substantially similar to the case under my consideration. In that case ‘A’ constructed an automobile factory at Madras and erected some machinery which he had shifted from Calicut. A portion of the Page: 58premises was in the occupation of ‘B’ a tenant, When ‘A’ applied for licence to run the factory, the Corporation of Madras refused to issue a licence on the ground that as per the rules no portion of the factory should be in occupation o??? another person. ‘A’ therefore applied to the Rent Controller for evicting ‘B’ on the ground that he required the same for carrying on his business. ‘B’ resisted the application alleging that ‘A’ was not seeking the portion for the business which he was carrying on but required it for a business which he intended to carry on in future. Applying the abovesaid test of ‘business’ and ‘carrying on business’ to the said facts it was held that ‘A’ had been carrying on automobiles business and towards that end he had been performing several acts like building the factory at a cost of several lakhs of rupees, shifting of the machinery from Calicut and applying for the licence to the Corporation of Madras for running the factory and that in such circumstances the contention of ‘B’ was devoid of any substance. To the same effect are the following two cases: K.S. Nataraja Achari v. J.K. Balasubramaniam 1957-II M.L.J 492, S. Kazimuddin Sahib v. Rangaswami Pillai 1958-II M.L.J 389. It is that clear that what section 7(3) (iii) requires is not that the landlord should have a business which he is already carrying on somewhere else if he want the tenant to be evicted. The abovesaid phrase is susceptible to the meaning of a person who has made all the preparations to commence business and took all necessary steps in a bona fide manner towards the starting of such a business. If we apply the test laid down by the abovesaid decisions to the facts of this case it becomes clear that the Court below has not erred in holding that the land-lords satisfied the conditions mentioned in section 7(3) (a) (iii). It is found in this case that the landlords obtained the requisite permission from the District Magistrate and collected the necessary material in erecting the cinema before he filed the petition in 1958. The contention of the learned Advocate that there is a conflict between the decision of Umamaheswaram, J., and that of Viswantha Sastry, J., for the reasons given above, does not appear to be correct. It is clear that the Act was brought in force in 1949 and right from 1953 to this date the abovesaid phrase is persistently interpreted in one way. It has never been interpreted in the narrow sense in which the learned advocate for the petitioners wants one to interpret, that it, that the phrase should be confined only to a case where the landlords have already established the business. No other authority taking any opposite view has been cited before me. I am therefore satisfied that the present case falls within section 7(3) (a) (iii) and the petition of the landlords for eviction has rightly been allowed on the ground of their bona fide requirement for carrying on the business.

10. It is contended by the learned advocate for the petitioners that the new Act realising the necessity of providing even for the case such as the present one has expressly added a provision to that effect in section 7 (3) (a) (iii) (b), which is in the following terms:—

“7(3) (a) (iii) In case it is any other non-residential building if the landlord 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 entitiled whether under this Act or otherwise: ……………”

(a) for the purposes of a business which he is carrying on on the date of application

(b) for the purposes of a business which the landlord bona fide proposes to commence”

11. His contention appears to be that from the later Act it should be inferred that the pervious Act had not provided for the situation as it arises in this particular case, whereas the new Act provided for the same. In support of this he relies on the following passage which appears at page 330 of Maxwell on Interpretation of Statutes, 10th Edition:

“When an amending Act alters the language of the principal statute, the alteration must be taken to have been made deliberately.”

12. I am afraid I cannot give effect to this argument. In all such cases inference does not necessarily arise that the Legislature intended to alter the law and make it as it was alleged to be. A different effect, however, would be given to an Act which showed, whether by recital or inference, that it intended to effect a change. It is no doubt true that subsequent legislation on the same subject may be looked into in order to see what is the proper construction to he put upon an earlier Act. It must, however, be taken for granted that the Legislature is acquainted with the actual state of the law and the course of judicial decisions which interpreted the phrase in a particular way. While therefore enacting the new Act in 1960 the Legislature must be presumed to know that, the Courts have held that the phrase ‘is carrying on business’ is applicable to a case where the landlord bona fide has made all preparations and taken all necessary steps to establish that business, and if in view of those decisions by way of abundant caution the Legislature has amended the relevant provision to explain things more clearly, it is difficult to conclude from that that what appear, to be in the new Act was not included in the old Act. No case was cited before me to support the contention that when the Legislature amends to clarify things, it necessarily means that what was in the original Act did not include what is given in the new Act. In fact the inference can legitimately be drawn the other way that the Legislature has thought it advisable to clarify the situation keeping in view the meaning which has been judicially put on the abovesaid phrase. Any change in the wording of a section of an enactment does not necessarily involve a change in the law as amendments are often made to clear up ambiguities and by an ambiguity I mean a phrase fairly and equally open to diverse meanings. In Kikabboy v. I.T Commisioner 1950 Bom. 6 at 9, Chagla, C.J, who spoke for the Bench, observed;

“Now it is not necessary to hold that in every case where the Legislature amends the law it does so because but for the amendments the effect would have been something different. There are innumerable cases in the history of legilsation where the Legislature has added or deleted words in order to clarify the position.”

13. In this particular case although persistent attempt was made both in the Andhra High Court as well as in the Madras High Court to put interpretation on the abovesaid phrase making it a narrower one and applicable to cases where the and lord has started the business, but the uniform interpretation put by both Page: 60those High Courts appears to have been now affirmed by the Legislature in the form of the abovementioned provision in the new Act of 1960.

14. In view of the reasons which I have sought to give this revision petition fails and is hereby dismissed with costs.

15. Petitioner will vacate within one month from to-day. Failing which order will be executed appropriately.

16. Revision Dismissed with costs.