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Aboobacker v. Nanu

Kerala High Court
Aug 24, 2001
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Judgment Summary — Civil Revision (Kerala Buildings (Lease & Rent Control) Act)

Factual and Procedural Background

This revision petition under Section 20 of the Kerala Buildings (Lease and Rent Control) Act challenges the judgment of the Rent Control Appellate Authority in R.C.A. No. 83 of 1989. The petitioners in R.C.P. No. 124 of 1985 are the same parties who are before this Court in revision.

The underlying Rent Control Petition was filed under Sections 11(3) and 11(4) (the opinion refers specifically to clause (ii) of sub-section (4) in its reasoning). The petitioners alleged a bona fide need for the premises on the ground that the first petitioner, who had been vending on the roadside in Bombay, was required to return to Thalassery because the Bombay Corporation prohibited such vending, and intended to start a business in the room then occupied by the respondent. The petitioners also alleged the tenant was running a cycle shop in a way that caused diminution of the room's value and utility.

The tenant filed objections denying the bona fides of the landlords' claim, asserting that both petitioners were engaged in business in Bombay and that the arrangement between them permitted one brother to look after the business when the other returned home. The tenant said there had been mediation by a merchants' association where the landlords sought an increase in rent; the tenant agreed to an increase of Rs. 60 but landlords demanded Rs. 80. The tenant also denied committing waste and attributed the reported defects to lack of maintenance. It was also pointed out that the Rent Control Petition was filed about 1½ to 1 year 10 months after issuance of notice.

At trial, documentary and oral evidence were adduced: Exts. A1–A3 for petitioners, Exts. B1–B3 for the respondent, Ext. C1 (the Commissioner's report), PWs 1 and 2 for petitioners, and RWs 1 and 2 for the respondent. The Rent Control Court found against the landlords on the bona fide occupation claim and on the ground under Section 11(4)(ii) but held the tenant not entitled to benefit under the Second Proviso; the R.C.P. was dismissed. The landlords appealed; the Appellate Authority (R.C.A. No. 83 of 1989) upheld the Rent Controller. This revision challenges that appellate decision.

Legal Issues Presented

  1. Whether the petitioners established a bona fide need for the premises under Section 11(3) of the Act.
  2. Whether the petitioners established that the tenant used the building so as to materially and permanently destroy or reduce its value or utility, thereby attracting eviction under Section 11(4)(ii) of the Act.
  3. Whether the delay between issuance of notice and filing of the Rent Control Petition undermines the landlords' claim of bona fide need in the circumstances of this case.

Arguments of the Parties

Petitioners' Arguments (as presented by their counsel)

  • The courts below erred in treating the delay between issuance of notice and filing the petition as fatal to the bonafide need claim; a lapse of time alone does not negate bona fides since mediation and an expectation that the tenant might voluntarily vacate could justify waiting.
  • The diminution-of-value question under Section 11(4)(ii) must be assessed with regard to the relevant point in time; counsel relied on Gurbachan Singh v. Shivalak Rubber Industries ((1996) 2 SCC 626 : AIR 1996 SC 3057) to support that proposition and submitted both courts were incorrect in rejecting the eviction ground on that basis.
  • There was nothing in the record to show that the first petitioner was not genuinely conducting business in Bombay; therefore the claim of bona fide need should have been accepted.
  • The petitioners denied the tenant's contention that they had alternative accommodation sufficient to negate bona fides (noting that the alleged hotel was conducted by the second petitioner and that there was no proof the other room was vacant).

Respondent's Arguments (as presented by their counsel)

  • Evidence showed the first petitioner went to Bombay and was conducting business there, and the delay in filing the R.C.P. could not be excused. The tenant promptly replied after notice (Ext. A3 dated 16.1.1984), but the R.C.P. was filed only in 1985.
  • The mediation by the merchants' association soon after notice indicated that landlords only sought an increase in rent (and not surrender of possession), undermining the landlords' claim of imminent personal occupation.
  • The respondent supported the reasoning of the courts below on both the bona fide occupation point and the absence of sufficient proof of material and permanent diminution in value or utility of the premises.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Gurbachan Singh v. Shivalak Rubber Industries, (1996) 2 SCC 626 : AIR 1996 Supreme Court 3057 Cited for the proposition that the question whether there has been diminution of value or utility should be considered with regard to the relevant point in time. The citation was brought to the Court's attention by petitioners' counsel. The opinion records the citation but the Court's subsequent analysis relies principally on the reasoning extracted from the Shanmugam decision when assessing "materially and permanently".
Shanmugam v. Rao Saheb, 1988 (1) KLT 86 Interprets the phrase "materially and permanently" in clause (ii) of sub-section (4) — minor or temporary destruction/alteration will not suffice; the destruction or reduction in utility/value must be reasonably substantial and not merely temporary. The Court applied this principle directly in testing the Commissioner's report (Ext. C1) and concluded that the reported defects did not amount to a material and permanent diminution; therefore eviction under Section 11(4)(ii) was not justified.

Court's Reasoning and Analysis

The Court addressed the two principal statutory grounds relied upon by the petitioners in turn: Section 11(4)(ii) (waste/diminution of value or utility) and Section 11(3) (bona fide requirement for own occupation).

Analysis under Section 11(4)(ii)

  • The Court observed that the only evidence relating to alleged destruction or diminution was the Commissioner's report (Ext. C1), which described worn cement flooring and plaster, exposed laterite stones at the entrance, and other localized defects.
  • The Court set out the statutory test contained in Section 11(4)(ii): eviction is permissible if the tenant uses the building so as to destroy or reduce its value or utility "materially and permanently".
  • The Court relied on the Shanmugam decision's interpretation that "materially and permanently" requires more than minor or temporary damage — the destruction or reduction must be of a reasonably substantial magnitude.
  • Applying that standard to Ext. C1, the Court concluded the defects described did not amount to a material and permanent diminution of value or utility. The Court also noted the landlords had not carried out repairs for a long time, which supported the tenant's explanation that deterioration resulted from non-maintenance rather than tenant misuse.
  • Accordingly, the Court agreed with the Rent Control Court that the landlords were not entitled to eviction under Section 11(4)(ii).

Analysis under Section 11(3) — Bona Fide Need

  • Both the Rent Control Court and the Appellate Authority had found the landlords' claim of bona fide need to be not established. The Appellate Authority's reasoning (referred to by this Court) considered delay, the nature of the mediation that occurred after notice, and lack of evidence of suitable alternative premises in the landlords' possession.
  • The Court acknowledged that delay between notice and filing a petition is not ipso facto fatal — a landlord may reasonably await voluntary vacation or attempt mediation — but emphasized that where a landlord offers an explanation for delay, that explanation must be acceptable on the facts.
  • On the facts, this Court agreed with the lower courts: after issuance of notice the tenant promptly replied (Ext. A3) and mediation occurred where the landlords sought only enhanced rent; the petition was filed approximately one year and ten months after notice. That sequence undermined the landlords' claim that they genuinely intended immediate occupation of the room.
  • The Court considered the landlords' assertion of alternative premises (a building or "Palace Lodge") and noted absence of satisfactory proof that such premises were available for the proposed use; further delay in producing deeds and the lack of evidence that the allegedly vacant building was actually in the possession of the person alleged (Ummer) weighed against the landlords.
  • Additional facts: after Ext. A3, rent was sent by money order and returned with the addressee absent, from which the lower courts inferred the first petitioner had gone to Bombay, again undercutting the immediacy of any need to occupy.
  • Having reviewed the record, the Court concluded the need asserted by the petitioners was not bona fide and therefore agreed with and upheld the concurrent findings of the courts below.

Holding and Implications

Holding: The Court upheld the order of the Rent Control Appellate Authority and dismissed the Civil Revision Petition.

Implications:

  • Direct effect: The landlords' claim for eviction under Sections 11(3) and 11(4)(ii) of the Kerala Buildings (Lease and Rent Control) Act was rejected; the Rent Control Appellate Authority's dismissal of the landlords' appeal is sustained.
  • The Court applied established interpretive guidance (notably the Shanmugam principle) that eviction on the ground of diminution requires material and permanent reduction in value or utility — minor or temporary defects are insufficient.
  • No broader legal precedent is being announced by this decision beyond the application of existing principles to the facts; the opinion does not state that it alters or establishes new law.

This summary is prepared exclusively from the provided opinion and does not add or infer facts beyond what the opinion contains.

Show all summary ...

S. Sankarasubban, J.:— This revision is filed under S. 20 of the Kerala Buildings (Lease and Rent Control) Act (hereinafter called as ‘the Act’) against the judgment of the Rent Control Appellate Authority in R.C.A No. 83 of 1989. Petitioners in R.C.P No. 124 of 1985 are the petitioners in this revision petition. The Rent Control Petition was filed under Ss. 11(3) and 11(4)(i) of the Act.

2. There are two petitioners in the R.C.P The bonafide need alleged was that the first petitioner was doing business in Bombay on the road side.

3. The Bombay Corporation has prohibited such vending and hence, he has to come back to Thalassery and he wants to start a business in the room occupied by the respondent. Further contention was that the respondent/tenant is conducting a cycle shop in the room. But he is using it in such a way that there is diminution in its value and utility. It is on the above allegation that the petition was filed.

4. The tenant filed objection in which it is stated that the bonafide need alleged is not true. Petitioners 1 and 2 are brothers. According to the tenant both of them were doing business at Bombay and the business is being conducted even now. According to him, the arrangement between petitioners 1 and 2 is that when one of them returns to home, the other should look after the business. It was further contended that notice was issued by the petitioners. There was mediation by merchants association. There the petitioners wanted only an increase in the rent. The tenant was willing to increase the monthly rent by Rs. 60/-. But the landlords wanted it at Rs. 80/ -. The tenant further contended that the landlords have got another building in which they can do business. The other contention was that he is earning for his livelihood in the business conducted. So far as the ground under S. 11(4)(ii) of the Act is concerned, the tenant contended that he has not committed any waste in the building. The cement on the floor has developed cracks due to non-maintenance. So also the plaster on the walls was worn out. It was further contended by the tenant that the R.C.P was filed nearly 1 1/2 years after the issue of notice. This itself will show that there is no bonafides in filing the petition.

5. On the basis of the pleadings, parties went for trial. Exts. A1 to A3 were marked on the side of the petitioners. Exts. B1 to B3 were filed on the side of the respondent. Ext. Cl is the commission report. PWs. 1 and 2 were examined on the side of the petitioners, while RWs. 1 and 2 were marked on the side of the respondent; The Rent Control Court found that the bonafide need alleged is not true. Further, it also held against the landlords regarding the ground under S. 11(4)(ii) of the Act. But it found that the tenant is not entitled to the benefit of the Second Proviso. Thus, the R.C.P was dismissed. The landlords preferred appeal before the Appellate Authority as R.C.A No. 83 of 1989. The Rent Control Appellate Authority upheld the findings of the Rent Controller and dismissed the appeal. It is against that the present revision is filed.

6. We heard learned counsel for the petitioners Sri. K.V Sohan and learned counsel for the respondent Sri. T.A Ramadasan.

7. Learned counsel for the petitioners submitted that so far as the ground of bonafide need is concerned, both the courts had made a wrong approach. According to the counsel, both the courts were carried away by the fact that there was a delay in filing the petition. He submitted that merely because some time lapsed between the issue of notice and the filing of the petition, it does not mean that there is no bonafide need. Learned counsel submitted there was mediation by the merchants association and the petitioners thought that the respondent will vacate the premises. Hence, they waited for some time. Regarding the ground under S. 11(4)(ii) of the Act is concerned, learned counsel brought to our notice a decision reported in Gurbachan Singh v. Shivalak Rubber Industries, (1996) 2 SCC 626 : AIR 1996 Supreme Court 3057 and contended that the question whether there has been diminution of value or utility should be looked into from the point of time and hence, both the courts were not correct in holding that the ground under S. 11(4)(ii) of the Act was not available. So far as the ground under S. 11(3) of the Act is concerned, it is further stated that there is nothing to show that the first petitioner was conducting business at Bombay and hence, the bonafide need ought to have been accepted. It was further contended that the allegation regarding acquisition of another building, viz., a hotel, is not correct, because that hotel is conducted by the second respondent. With regard to acquisition of another room, learned counsel submitted that there was no proof to show that the room was vacant. Learned counsel for the respondent submitted that the facts and circumstances of the case will show that after issuing notice, the first petitioner went to Bombay and there he was conducting business. But the delay in filing the petition cannot be excused. Immediately after the issue of notice by the petitioners, there was a mediation by the merchants association. There, the landlords only contended that they want increase in rent. After the mediation failed, the tenant replied by Ext. A3 within the short time. Ext. A3 is dated 16.1.1984 But the RCP was filed only in 1985. He further supported the reasonings of the courts below on the other aspects of the case.

8. The first question to be considered in this case is whether the ground under S. 11(4)(ii) of the Act has been established by the petitioners. The only evidence regarding this aspect is the report of the Commissioner which is produced as Ext. C1. A perusal of the report of the Commissioner will show that the case set up by the petitioners cannot be accepted. In the report of the Commissioner, in paragraph 3, it is stated as follows: “In the room cement flooring is seen gone in some places. The plastering of walls is also worn out in some places. At the entrance the room from the verandah cement is gone to the extent, that one can see the laterite stones. In the central portion of the verandah cement flooring is gone. In some places even jelly which is used for flooring is also gone”. It is on the basis of that the petitioners contended that they are entitled to get eviction under S. 11(2) of the Act. We don’t for a moment disagree with the contention raised by the petitioners. What S. 11(4)(ii) of the Act contemplates is that “if the tenant uses the building in such a manner as to destroy or reduce its value or utility materially and permanently”. As was observed in the decision reported in Shanmugam v. Rao Saheb, 1988 (1) KLT 86, the expresion “materially and permanently” in clause (ii) of sub-r. (4) of the Act would certainly indicate that a landlord cannot get an order of eviction on that ground by mere proof of minor destruction, or alteration, even if it results in marginal reduction of value or utility. As the expression was used conjunctively the legislature has indicated that even material alterations of a temporary nature would not help the landlord in getting an order of eviction. The destruction or reduction of utility or value of the building must be of a reasonably substantial magnitude. When we test the Commissioner's report in the light of the above decision, it cannot be said that there has been any reduction in value of the utility materially and permanently. In this context, it is to be noted that the landlords have not repaired the building for a long time. This will give credence to the case of the tenant that the repairs found out by the commissioner were due to non-maintenance. Hence, we agree with the Rent Control Court that the landlords are not entitled to get eviction under S. 11(4)(ii) of the Act.

9. The next question is regarding S. 11(3) of the Act. As we already stated, both the courts have concurrently found against the landlords. The Appellate Court has discussed this question in paragraphs 8 to 11. The Court below has taken into account the Rent Control Petition. The Rent Control Petition was filed about one year and 10 months after the issuance of Ext. A2 notice. It also found that the explanation given by the landlords for the delay is not correct. Then it took note of the fact that there was mediation by the merchants’ association after notice was issued to the tenant. In that mediation, the demand by the landlords was for increase in monthly rent and there was no mediation for surrender of possession of the shop room. Then regarding the contention that the landlords purchased another building and was conducting a lodging business by name “Palace Lodge”, the Appellate Authority held that so far as the Palace Lodge is concerned, it will not be possible to start a stationery business. So far as the building, which was lying vacant, the petitioners’ case was that it was in the possession of one Ummer. The Appellate Court took the view that there was no evidence to show that the above building is in the possession of Ummer. It is on this ground that the Appellate Court rejected the contention of the petitioners holding that there was no bonafide.

10. We went through the evidence adduced in this case. It is true that it may not be possible always to state that immediately after the issue of notice for eviction, the Rent Control Petition should be filed. The Court can take note of the fact that a party may not rush to the court to get remedy. In many cases, parties are getting eviction without approaching the Court. Hence, there may be obligations between the parties even after issuing notice and there is nothing wrong for the landlords to wait for some time to see that the tenant voluntarily surrenders the building. Sometime it may happen. If some time is given, the tenant will find an alternate accommodation and vacate the premises. Hence, according to us, the delay as such may not be a criteria to throw out the claim of a landlord under S. 11(3) of the Act. Now, both the Courts have not rejected the contention on the ground of delay. But only stated that the explanation given by the landlords for the delay is not acceptable. We agree with the findings of the courts below, because immediately after the issue of notice, reply was given by the tenant. In the reply, the tenant also stated about the mediation efforts. It is only one year afterwards that the petition was filed. So far as this case is concerned, the landlords very well knew that there was no possibility of the tenant vacating the premises. It is after Ext. A3 that rent was sent to the landlords by Money Order. It was returned on the ground that the addressee was not there. From this, an inference is taken that the first petitioner has gone to Bombay. Further, in the mediation by the merchants association the only ground put forward is regarding the enhancement of rent. If as a matter of fact, the petitioners wanted the room on the ground of own occupation, definitely this matter would have been stated before the merchants association. On the other hand, it is seen from the evidence that both the parties agreed to enhance the rent. But ultimately that settlement fizzled out. This circumstance shows that the need alleged is not bonafide. It may be that Palace Lodge was purchased in the name of the second petitioner. But even then, there was delay in producing the deed. Before this Court, the petitioners produced some docs by filling C.M.P No. 3896 of 1992, which will show that no room is in their possession and that the room is in the possession of Ummer. We don’t think, it is necessary to go into that question because, we agree with the court below that the need alleged by the petitioners is not bonafide.

11. In the above view of the matter, we uphold the order of the Appellate Authority and dismiss the Civil Revision Petition.