Case BriefsForeign Courts

Supreme Court of the United Kingdom: A Full Bench of Lord Briggs (President), Lord Carnwath, Lord Hodge, Lord Wilson and Lady Arden, JJ. allowed the appeal by a majority of three to two. Lord Briggs gives the main Judgment with which Lord Carnwath and Lord Hodge agree. Lady Arden and Lord Wilson each give a dissenting Judgment with respect to withholding consent of the landlord.

Hautford Ltd. was a tenant of a whole building in Soho under a 100-year lease. The lease is permitted that the whole property is to be used for residential purposes, however, at the time when it was granted in 1986 only the top two floors were used for residential purposes. Around 2013 the tenant developed other floors of the building into residential flats and then sought planning permission for the change of use. The lease contained a provision that the tenant must obtain the landlord’s consent not to be unreasonably withheld for any application of planning permission. The tenant sought consent from the landlord, Rotrust Nominees Ltd., which was ultimately refused. The landlord’s ground for withholding consent were on the basis that by turning the whole building into residential use, the tenant could have a strong claim under the statute for enfranchisement meaning to compel the landlord to sell the freehold to the tenant.

The High Court and the Court of Appeal both ruled that refusing consent based on the risk of enfranchisement was unreasonable when taking into account that the lease permitted use of the whole building for residential purposes.

Lord Briggs delivered the majority opinion and remarked that the case was not one with complex disputed fact nor did it deal with complicated points of law. Rather it deals with one simple question: did the landlord act was reasonable or unreasonable.

The Court summarised the established principle which is to be followed when assessing whether a party has acted reasonably:

  • The grounds for withholding consent must be to do with the relationship of landlord and tenant in regard to the subject matter of the lease. 
  • Decisions should be based on the specific facts and care must be taken “not to elevate a decision made on the facts of a particular case into a principal of law”. 
  • The conduct only has to be reasonable it does not need to be right or justifiable.

With respect to the first test, Lord Briggs held that the real risk of enfranchisement was central to a landlord and tenant relationship and in relation to the third test; he held that enfranchisement would clearly adversely affect the landlord’s reversionary interest which was an essential type of consideration that the refusal of consent was reasonable.

Lady Arden and Lord Wilson disagreed with the majority holding and upheld the reasoning of the Court of Appeal and the High Court.

The Court granted the Appeal and considers that, on the undisputed facts; the landlord was acting reasonably in protecting the value of its property.[Sequent Nominees Ltd. v. Hautford Ltd, [2019] 3 WLR 981, decided on 30-10-2019]

Case BriefsForeign Courts

Malaysia Court of Appeal: A Full Bench of Hamid Sultan Bin Abu Backer, Hanipah Binti Farikullah, Kamaludin Bin Md Said, JCA overturned a decision of a High Court which ordered a tenant to vacant possession and pay double rental to the new owner of a land due to the non-existence of any legal tenancy agreement between the two.  

The appellant/defendant had been a tenant of the land the respondent/plaintiff bought at an auction on 12-09-2019 and hence, the validity of the tenancy agreement was called into question. The defendant contested that the tenancy agreement was until 14-10-2019 but there was no legal proof to support that claim. Essentially, there was no legal backing behind the defendant’s claims while the argument of the plaintiff was bolstered by Section 28(4) of the Civil Law Act, 1956 which allows for entitlement to double rental in case there is no valid tenancy agreement.

The Court of Appeals, however, found no basis for allowing the double rental. On one hand, the respondent does not want to recognise the appellant as a tenant and on the other, he wants double rental based on a tenancy agreement with the previous owner. Stating the same, the Court set aside the judgment of the High Court and said that the appellant should give up possession on the agreed date along with full but not double rental. The Court issues no order as to costs. [Abad Arena Juara Sdn Bhd v. Rajesh A/L Jaikishan, Appeal Civil No. N-04(NCVC)(W)-659-12 of 2018, decided on 26-07-2019]

Case BriefsHigh Courts

Delhi High Court: Sanjeev Sachdeva, J., allowed a petition that challenged the impugned order whereby petitioner’s application under Order 12 Rule 6 CPC for judgment on admissions was rejected.

The petitioner (landlord) had filed a suit for possession of the suit property which was owned by her. She had prayed for ejectment of the tenant-respondents. The petitioner moved an application under Order 12 Rule 6 CPC which was rejected by the trial court on the sole ground that the tenant did not make any admission as to the ownership of the petitioner and their tenancy in the suit property.

On facts, the High Court held that the trial court erred in reaching the said conclusion, as in the written statement filed by the tenant, there was a clear admission that they were tenants under the petitioner, and the petitioner was the owner of the suit property. Even the receipt of legal notice served by the petitioner for ejecting the tenants was admitted.

On the point of law, the Court noted that in a suit for ejectment, the landlord has to establish: (i) Relationship of landlord and tenant; (ii) Tenancy is not a protected tenancy under the Delhi Rent Control Act, 1958; (iii) There is no registered subsisting lease agreement; (iv) Tenancy has been terminated and the respondent tenant has failed to hand over possession.

The Court was of the opinion that since, there was an unequivocal admission of the ingredients that the landlord has to establish for seeking ejectment of its tenant, the application filed by the petitioner under Order 12 Rule 6 CPC ought to be allowed. Orders were made accordingly. [Geeta v. Mohd. Raza, 2019 SCC OnLine Del 11385, decided on 14-11-2019]

Case BriefsHigh Courts

Jharkhand High Court: Sujit Narayan Prasad, J. dismissed a writ petition under Article 226 of the Constitution of India whereby the petitioner sought for a direction upon the respondents to allot a shop situated at the Municipal Library in the name of the petitioner on the ground that he has been running the aforesaid shop since long. 

The petitioner was not the allottee of the shop, rather, the shop was sublet in his favour by the original allottee. As the period of lease of the original allottee had expired, the petitioner handed over the keys of the shop with an application for consideration for allotment of the shop in his favour, but the shop was allotted to someone else. The petitioner argued that he was not allotted the shop as he was not deemed fit or proper since he was a handicapped person. The petitioner further submitted that he has been running the shop for long, and therefore priority ought to have been given by the respondents in allotment of the said shop. Counsel for the State submitted that the petitioner had no right to claim the allotment of the said shop since the said shop was never allotted in his favour, rather, he was tenant of the original allottee and after expiry of the lease in favour of the original allottee, the petitioner had no right to remain in the said premises. Furthermore, the order of allotment made in favour of the other person was never assailed.

The Court heard both the parties and decided that the shop in question was never allotted in the favour of the petitioner, rather, he was claiming allotment of the said shop by virtue of the fact that he was in occupation by way of the tenant by the original allottee. The allotment of the shop by virtue of the expiry of the lease expired and therefore, the petitioner had no right to remain in possession of the said shop.  The petitioner had simply prayed in this writ petition for allotment of the said shop on the ground that he was handicapped and was running a shop in the said premises since long, but merely because the petitioner is handicapped, no sympathy could be shown by the Court ignoring the process of allotment of the shop. Also, the order of allotment was also never under challenge. The writ petition was dismissed. [Amarendra Kumar v. State of Jharkhand, 2019 SCC OnLine Jhar 1451, decided on 18-10-2019]

OP. ED.

Introduction

In a recent order[1] the Supreme Court Bench consisting of Justice Nariman and Justice Saran raised questions on the correctness of the judgment of Himangni Enterprises v. Kamaljeet Singh Ahluwalia[2] holding lease disputes under the Transfer of Property Act, 1882 are non-arbitrable. The judges decided[3] to refer the Himangni Enterprises[4] decision to a larger Bench for review. In this background the authors analysing the Himangni Enterprises[5] decision argues that it is based on an orthodox and conservative approach limiting numerous subject-matters as non-arbitrable. The Court’s reason in Himangni Enterprises[6] that disputes arising under the Transfer of Property Act, 1882 involves a “right in rem” and thus non-arbitrable is seriously debatable. It reflects an unprogressive view on arbitration at a time when the public policy of India calls for increased reliance on alternate dispute resolution (ADR) mechanisms for resolution of civil and commercial disputes.

Brief Facts of the Case

In Himangni Enterprises[7] the respondent (Kamaljeet Singh Ahluwalia) filed an eviction suit in 2015 against the appellant (Himangni Enterprises) before the Additional District Judge, Saket, New Delhi. As per the respondents, the suit premises had been leased out to the appellants for a period of three years through a lease deed in 2010. The lease deed had lapsed due to passage of time and thereafter, no fresh lease deed was executed between the parties. The respondent prayed for the eviction of the appellants and recovery of arrear rent. The appellant responded by filing an application under Section 8 of the Arbitration and Conciliation Act, 1996 for referring the matter to arbitration since the lease deed contained an arbitration clause by virtue of which the disputes arising out of the suit premises had to be resolved through arbitration.[8] The respondents objected to this application on two principle grounds: first, that since the lease deed had expired, the arbitration clause in it cannot be enforced; second, that the subject-matter of the dispute cannot be resolved by arbitration. The District Court upheld the respondent’s objections and dismissed the Section 8 application. On an appeal, the High Court upheld the order of the District Court. Himangni Enterprises[9] appealed the to Supreme Court challenging the impugned order of the High Court.

Decision of the Supreme Court of India

The Supreme Court of India relying upon the judgment of Natraj Studios (P) Ltd. v. Navrang Studios[10] and of Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd.,[11] dismissed the appeal and held that the  courts below were right in dismissing the application of the applicants to refer the dispute for arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.[12]

With reference to Natraj Studios, the facts of which are similar to the facts in the instant case, the Supreme Court dismissed the application filed by the tenant under the Arbitration Act, 1940. Justice O. Chinnappa Reddy in his judgment held that “both by reason of Section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 and on the broader considerations of public policy” only the court and not the arbitrator has jurisdiction to hear the instant dispute.[13]

With reference to Booz Allen, the Supreme Court listed down the nature of disputes considered to be non-arbitrable in India.[14] One of the non-arbitrable matters recognised by the Court was “(vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes.”[15]

The Supreme Court in its judgment in Himangni Enterprises relying upon the law laid down by it in the above two judgments, unhesitantly dismissed the appeal, and held that the civil suit filed by the respondents is maintainable despite the parties having an agreement to arbitrate.[16]

The Court also rejected the appellants’ argument that the above two judgments may not be relied upon as the judgments speak of those matters governed by the special statute. The appellants had contended in support of this argument that in the instant matter, the Delhi Rent Control Act, 1958 not applicable by virtue of its Section 3(1)(c) and hence, the law laid down by the Supreme Court in the above two judgments may not apply. Refusing to accept this contention of the appellants the Court held that the Delhi Rent Control Act, 1955 is a special Act that covers the disputes relating to rent and eviction. Even though the provisions of the Act is not applicable in the present matter by virtue of its Section 3, that does not ipso facto makes the Arbitration and Conciliation Act, 1996 applicable to the present dispute. In case of the inapplicability of the Delhi Rent Control Act, 1955, the matter shall be governed by the Transfer of Property Act, 1882, and shall be determined by the civil court and not by the arbitrator.[17] Accordingly, the Court dismissed the appeal and directed the concerned civil court to proceed with the trial of the suit on the merits of the case.[18]

Analysis of the Judgment and its Contradictions

The correctness of Himangni Enterprises[19] is now been referred to a larger Bench of the Supreme Court, and in the authors’ opinion, the decision is not compatible with the contemporary law of arbitration and adversely affects it. The authors rely on this proposition based on the re-examination of the following three issues viz. (i) Whether the Court was justified in its ruling on Section 3(1)(c) of the Delhi Rent Act, 1995? (ii) Whether the Court has rightfully interpreted the Booz Allen[20] judgment vis-à-vis right in rem versus right in personam? (iii) Whether the Court was justified in relying upon Natraj Studios[21] judgment?

I. The Court was not Justified in its Ruling on Section 3(1)(c) of the Delhi Rent Act, 1995:

The Court in Himangni Enterprises was not correct in its reasoning while dealing with the issue of the non-applicability of Section 3(1)(c) of the Delhi Rent Act, 1995. The Court held that if the Delhi Rent Act, 1995, by virtue of its Section 3(1)(c) is not applicable to the present case, then the civil suit shall be tried under Transfer of Property Act, 1882, by the civil court and not by the arbitrator.[22] The Court based its deduction on the reasoning that:

24. …by virtue of Section 3 of the Act [Delhi Rent Act, 1995], the provisions of the Act are not applicable to certain premises but no sooner the exemption is withdrawn or ceased to have its application to particular premises, the Act becomes applicable to such premises.[23]

But such a conclusion does not fit with the basic objective behind this enactment.

Section 3(1)(c) of the Delhi Rent Act, 1995 is enacted with an intent to protect the tenants who belong to weaker section of the society.[24] The Supreme Court of India in D.C. Bhatia v. Union of India[25] said that Section 3(1)(c) of the Delhi Rent Act, 1995 purposefully exclude its application over the premises rented higher than the specified limit, since the latter are used by relatively affluent tenants.[26] The Court further said that the enactments of Rent Control Acts are “temporary measures” in order to protect the tenants from arbitrary eviction and from landlord’s unprecedented enhancement of rent,[27] and hence, the application of Delhi Rent Act, 1995, in the wisdom of legislature, is restricted only to the premises those are rented up to Rs 3500.[28]

The same principle has been followed by the Delhi High Court in P.S. Jain Co. Ltd. v. Atma Ram Properties (P) Ltd.,[29] and in Atma Ram Properties (P) Ltd. v. Pal Properties (India) (P) Ltd.,[30] where the Court said that “the intention behind Section 3(c) is that a premises which fetches a rent of Rs 3500 per month should be exempt and that protection should be restricted to buildings fetching a rent less than Rs 3500 per month.[31] Further, the Supreme Court in Parripati Chandrasekharrao and Sons v. Alapati Jalaiah,[32] also took the same view while dealing with the inapplicability of A.P. Rent Act,[33] over the premises rented out on above Rs 1000.[34]

Thus, it is quite clear that the Court’s reason in Himangni Enterprises on the issue of non-applicability of the Delhi Rent Act, 1995 over the premises is in question. According to the Court, the Act is applicable “no sooner the exemption is withdrawn or ceased to have its application”.[35] It is clear from the above discussion that the Rent Control Acts are special Acts, which are enacted as “temporary measures” for protection of special category of tenants. Since the parties in the instant case do not fall within the category of tenant for those the Act has been enacted for, neither the Act, nor the rights and liabilities arising out of it, shall be applicable over the appellant at any stage of time. Hence, the judgment of Booz Allen is also not applicable in the instant case. In Booz Allen, the Court held that “eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes” are non-arbitrable.[36] However, in this case, there is no protection granted to the appellant under the special statute, and hence, it can be inferred that the Court has inappropriately applied the rationale of Booz Allen[37] where it is certainly not applicable at all.[38]

II. That the Court has Incorrectly Interpreted the Booz Allen[39] Judgment vis-à-vis Right in Rem Versus Right in Personam

The Booz Allen judgment marks the difference between right in rem and right in personam.[40] The Court in Booz Allen held that all the disputes pertaining to right in rem are to be adjudicated by the Courts and public tribunal, while the disputes pertaining to right in personam can be considered to be resolved by arbitration.[41] However, the Court clarified, that it is not an “inflexible rule” for the “disputes relating to subordinate rights in personam arising out of right in rem have always been considered to be arbitrable.”[42] Hence, it is inferred that in the instant judgment of Himangni Enterprises[43], where even though the dispute between the parties is in a nature of right in rem, such dispute is arising out of contract/lease between the parties; and hence, the horizon of right to enjoy the property versus the ownership is completely between the lessee and lessor; and therefore, such dispute can be resolved by arbitration.

It was said by the Supreme Court of India in Olympus Superstructures (P) Ltd. v. Meena Vijay Khetan,[44] that disputes pertaining to specific performance of the contract can be resolved by arbitration,[45] and thus, the Court held that the arbitrator can pass an arbitral award granting the specific performance of the contract pertaining to immovable property.[46] Further, in Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums,[47] where the respondent resisted arbitration because the dispute was of criminal nature under special statute, the Supreme Court of India rejected the respondent’s plea, and held that the rights of the claimant under the contract is independent of the statutory provisions and therefore the contractual rights could be adjudged upon by the arbitrator.[48] The Court further noticed that “the existence of a dual procedure; one under the criminal law and the other under the contractual law is a well-accepted legal phenomenon in Indian jurisprudence.[49]

Hence, it can be inferred from the above discussion that in Himangni Enterprises[50], the impugned dispute could have easily been referred to arbitration, and hence, the decision of the Court is representing the orthodox approach and sets an unfortunate impetus towards the non-arbitration regime in India.

That the Court is not Justified in Relying upon the Natraj Studios[51] judgment

Lastly, the reliance of the Natraj Studios (P) Ltd. v. Navrang Studios[52] by the Court in Himangni Enterprises[53] is also not well justified. The Natraj Studios[54] is 1981 judgment decided under the Arbitration Act of 1940, and it is a well-settled law in arbitration jurisprudence in India, that the cases decided on the basis of Arbitration Act of 1940, cannot be blindly relied upon as a valid precedent for the cases governed by Arbitration and Conciliation Act of 1996 for the objectives of both the acts are entirely different.[55]  The Supreme Court of India in Sundaram Finance Ltd v. NEPC India Ltd.[56] said that the Acts of 1996 Act and 1940 are very different from each other and therefore the provisions of the 1996 Act have to be interpreted independently and separately from the 1940 Act to avoid any form of misconception.[57] Thus, it is concluded that the over-reliance on the Court in the judgment of Himangni Enterprises[58] on Natraj Studios[59] as a precedent was not appropriate.

This inference is further emphasised in light of the view on the mandatory nature of Section 8 of the Arbitration and Conciliation Act, 1996 as held by Justice Chandrachud in A. Ayyasamy v. A. Paramasivam[60]. Justice Chandrachud in his opinion has cautioned that for courts deciding a dispute is non-arbitrable under the law for the time being in force must carefully look into the facts and materials for the purpose of determining whether the defence is merely a pretext to avoid arbitration. He emphasises the importance of respecting the parties’ choice of arbitration by observing:

45.2. …Once parties have agreed to refer disputes to arbitration, the court must plainly discourage and discountenance litigative strategies designed to avoid recourse to arbitration. Any other approach would seriously place uncertainty on the institutional efficacy of arbitration. Such a consequence must be eschewed.[61]

Conclusion

The analysis of the judgment above reveals that this decision upholds a conservative approach not quite in line with the contemporary legislative and judicial reforms underway to strengthen arbitration in India. Also, this judgment is not in line with the pro-arbitration approach and may impede the growth of arbitration in India. Therefore, the authors most respectfully submit that it is both timely and essential to revisit the judgment by a larger Bench of the Supreme Court of India.


 †  Associate Professor of Law, Maharashtra National Law University, Nagpur.

††  III year student, BA LLB (Hons.), Maharashtra National Law University, Nagpur.

[1]  Vidya Drolia v. Durga Trading Corpn., 2019 SCC OnLine SC 358.

[2]  (2017) 10 SCC 706.

[3]  Vidya Drolia v. Durga Trading Corpn., 2019 SCC OnLine SC 358.

[4]  (2017) 10 SCC 706.

[5]  (2017) 10 SCC 706.

[6]  (2017) 10 SCC 706.

[7]  (2017) 10 SCC 706.

[8]  Cl. (9.8) of the Arbitration Agreement, Himangni Enterprises v. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706.

[9]  (2017) 10 SCC 706

[10]  (1981) 1 SCC 523.

[11]  (2011) 5 SCC 532.

[12] Himangni Enterprises v. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706.

 [13]  Natraj Studios (P) Ltd. v. Navrang Studios, (1981) 1 SCC 523, para 24.

[14]  Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532, para 36.

[15]  Ibid.

[16]  Himangni Enterprises v. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706.

[17]  Himangni Enterprises v. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706, para 24.

[18]  Para 28, Id.

[19]  (2017) 10 SCC 706.

[20]  (2011) 5 SCC 532.

[21]  (1981) 1 SCC 523.

[22]  Himangni Enterprises v. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706, para 24.

[23]  Id., p. 712.

[24]  D.C. Bhatia v. Union of India, (1995) 1 SCC 104; P.S. Jain Co. Ltd. v. Atma Ram Properties (P) Ltd., 1996 SCC OnLine Del 875 : (1997) 40 DRJ 220; Atma Ram Properties (P) Ltd. v. Pal Properties (India) (P) Ltd., 2001 SCC OnLine Del 438 : (2002) 62 DRJ 623.

[25]  (1995) 1 SCC 104.

[26]  D.C. Bhatia v. Union of India, (1995) 1 SCC 104, para 11.

[27]  Para 22, Id.

[28]  Para 28, Id.

[29]  1996 SCC OnLine Del 875 : (1997) 40 DRJ 220.

[30]  2001 SCC OnLine Del 438 : (2002) 62 DRJ 623.

[31]  P.S. Jain Co. Ltd. v. Atma Ram Properties (P) Ltd., 1996 SCC OnLine Del 875 : (1997) 40 DRJ 220; Atma Ram Properties (P) Ltd. v. Pal Properties (India) (P) Ltd., 2001 SCC OnLine Del 438 : (2002) 62 DRJ 623.

[32]  (1995) 3 SCC 709.

[33]  A.P. Buildings (Lease, Rent and Eviction) Control Act, 1960.

[34]  In Parripati Chandrasekharrao and Sons v. Alapati Jalaiah, (1995) 3 SCC 709,  the Court held that “in the case of a tenant, the protective shield extended to him survives only so long as and to the extent the special legislation operates. The rights and remedies of the tenants are not vested and could be taken away”.

[35]  Himangni Enterprises v. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706, para 24.

[36]  Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532, para 36.

[37]  (2011) 5 SCC 532.

[38]  Here, it is noteworthy that in Bharat Petroleum Corpn. Ltd. v. P. Kesavan, (2004) 9 SCC 772: AIR 2004 SC 2206, it was held that the Transfer of Property Act, 1882 is not a special statute and only codifies the general law of transfer of property. Thus, even if the present case falls within the purview of the Transfer of Property Act, 1882, the Booz Allen judgment cannot be relied upon. The same position has also been confirmed by the Calcutta High Court in Ambuja Neotia Holdings (P) Ltd. v. Planet M Retail Ltd., 2015 SCC OnLine Cal 7000, in which the Court held that the disputes governed by Transfer of Property Act are arbitrable as the Transfer of Property Act is not a special statute and only codifies the general law of transfer of property.

[39]  (2011) 5 SCC 532.

[40]  Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532, para 37.

[41]  Para 38, Id.

[42]  Para 38, Id.

[43]  (2017) 10 SCC 706.

[44]  (1999) 5 SCC 651.

[45]  Para 36, Olympus Superstructure (P) Ltd. v. Meena Vijay Khetan, (1999) 5 SCC 651.

[46]  Para 33, Olympus Superstructure (P) Ltd. v. Meena Vijay Khetan, (1999) 5 SCC 651. The position that the arbitrator can grant specific performance of the contract has been reiterated in Lakshmi Narain v. Raghbir Singh,1956 SCC OnLine P&H 17: AIR 1956 P&H 249; in Fertilizer Corpn. of India v. Chemical Construction Corpn., 1973 SCC OnLine Bom 55 : ILR 1974 Bom 856, 858; in Keventer Agro Ltd. v. Seegram Comp. Ltd., Apo 498 of 1997 & APO 449 of (401) dated 27-1-1998 (Cal); the judgment of Delhi High Court in Sulochana Uppal v. Surinder Sheel Bhakri, 1990 SCC OnLine Del 250 : AIR 1991 Del 138 has been overruled.

[47]  (2003) 6 SCC 503.

[48]  Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums, (2003) 6 SCC 503.

[49]  Ibid.

[50]  (2017) 10 SCC 706.

[51]  (1981) 1 SCC 523.

[52]  Natraj Studios (P) Ltd. v. Navrang Studios, (1981) 1 SCC 523.

[53]  (2017) 10 SCC 706.

[54]  (1981) 1 SCC 523.

[55]  Sundaram Finance Ltd v. NEPC India Ltd., (1999) 2 SCC 479: AIR 1999 SCC 565; Union of India v. Arctic India, 2010 SCC Online Del 2518; McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181.

[56]  (1999) 2 SCC 479 : AIR 1999 SCC 565.

[57]  Sundaram Finance Ltd. v. NEPC India Ltd., (1999) 2 SCC 479: AIR 1999 SCC 565; Union of India v. Arctic India, 2010 SCC Online Del 2518.

[58]  (2017) 10 SCC 706.

[59]  (1981) 1 SCC 523.

[60]  A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386.

[61]  Id., p. 415.

Case BriefsHigh Courts

Himachal Pradesh High Court: The instant petition involved a question that whether the eviction of tenant could be ordered for settling married son of the landlord under Section 14(3)(a)(i) of H.P. Urban Rent Control Act, 1987, even the same was not covered by Section 14(3)(d) of the Act. The same question was contemplated by Tarlok Singh Chauhan, J.

Factual matrix of the case was that the landlord filed a rent petition under Section 14 of the Act of 1987, before the Rent Controller. He sought eviction of the tenant on the ground that his son intended to settle his business in the same premises and that since he and his wife were old, they wanted to live with their son at Solan. The landlord also claimed arrears of rent and sought eviction on the ground of material addition and alteration being carried out by the tenant in the premises in question.

The tenant contested the petition tooth and nail and denied the grounds taken in the petition seeking his eviction from the premises in question. Subsequently, an order was passed in favor of the landlord and the tenant-petitioner was directed to be evicted on the grounds of non-payment of arrears of rent and that the son of the landlord needed the premise for the running business. The tenant was aggrieved by the order and he went into an appeal, the appellate authority dismissed his appeal and hence, the tenant had no other option but to file the instant petition.

Pratap Singh Gover, counsel for the landlord, relied on cases where the similar reiteration of law was found in the Judgments, Nand Lal Sharma v. Bimla Sharma, HLJ 2007 (HP) 1112; Jasvinder Singh v. Kedar Nath, HLJ (2012) (HP) 1452; Jagat Ram Chauhan v. Avinash Partap, HLJ 2014 (HP) 420 etc. further the counsel presented the witnesses, one of them was the son of the landlord, who testified that the said premise was needed by them, as his parents were old and he wanted to start his own business, but for the time being he was residing in Delhi.

On the contrary, tenant appeared as a witness and deposed that son of the landlord was residing abroad in Mexico and was doing business there and he had no intention to shift or settle at the said premise. He stated that the landlord intended to sell the tenanted premises and the proposed buyer had been forcing the landlord to get the tenanted premises vacated and in order to give vacant possession to the buyer, the landlord had concocted false plea of bona fide requirement.

The Court after the submissions of the parties observed that, there was no reason to doubt the bona fide requirement of the landlord as admitted, he was a senior citizen aged about 83 years and thus required someone to look after him and his property. The testimony of the son of the landlord was also not doubted. It was further observed that the tenant had no proof of what he alleged that the landlord wanted to sell the premise. Hence, the Court found no merit in the petition and dismissed the same.[Mandeep Singh v. Gian Chand, 2019 SCC OnLine HP 1029, decided on 18-07-2019]

Case BriefsHigh Courts

Sikkim High Court: Bhaskar Raj Pradhan, J. confirmed a decree of eviction passed against the appellant-tenant by the District Judge on the bonafide requirement of the landlord.

The sole ground for eviction being contended in the application was the requirement of suit premises for the personal occupation of the landlord. Under the relevant statutory notification, the landlord could evict the tenant only on showing the bonafide requirement for personal occupation. A holistic reading of the plaint suggested that the landlord required the suit premises as his house was in a dilapidated condition; his ill health including mental illness for which he desired to accommodate a help; to accommodate his growing children who did not have adequate personal space in the house and who were pestering him for it which was causing him mental stress; to establish them in business as they were completing their education; etc.

The appellant -tenant was represented by Laxmi Chakraborty and Manju Rai, Advocates. Per contra, Zangpo Sherpa, Deven Sharma, Jushan Lepcha and Mon Maya Subba, Advocates represented the respondent-landlord.

On perusal of the record, the High Court found the facts as claimed of the landlord to be true. Referring to its earlier case in Pradeep Golyan v. Durga Prasad Mukhia, 2016 SCC OnLine Sikk 225, the Court observed: “That personal occupation of the landlord includes the requirement of the dependents as well is now well settled.” The landlord pleaded hardship and proved it. He proved a bonafide requirement of personal occupation. Furthermore, the appellant did was unable to show any special equities in his favour against the eviction.

In such circumstances, the Court confirmed the decree of eviction passed by the District Judge. However, considering the fact that the appellant was in occupation of the suit premises and doing his business from there since 1999, he was given four months’ time to vacate the suit premises on the condition that he will continue to pay rent till then. [Bishnu Prasad Bhagat v. Prakash Basnett, 2019 SCC OnLine Sikk 84, decided on 15-06-2019]

Case BriefsHigh Courts

Delhi High Court: Sanjeev Sachdeva, J., allowed a petition filed by the allottee of the subject shop who was charged with an offence punishable under Section 447 (punishment for criminal trespass) IPC, and quashed the order whereby the charge was farmed against him.

The petitioner was the allottee of the subject shop. It was alleged by the respondent that the petitioner had agreed to rent out the shop to him and had demanded a sum of Rs 50,000 to be paid in advance, after the payment of which the petitioner handed over the keys to him. The respondent, in his complaint filed under Section 200 CrPC, alleged that the petitioner, however, did not remove his articles from the shop with malafide intentions. And on 27-02-2011, while the complainant was getting the woodwork done, the petitioner broke the lock and trespassed into the shop.

Aditya Madan, Advocate for the petitioner contended that the trial court erred in framing the charge and not appreciating there was the allottee of and in possession of the shop. Per contra, Subodh Kumar Pathak, Advocate for the respondent supported the impugned order.

The High Court noted that admittedly, the petitioner was the allottee of the shop. The respondent did not produce any evidence to corroborate that any tenancy was created in his favour or the possession was handed over to him. It was observed: Section 447 is punishment for Criminal Trespass which is defined under Section 441 to be committed when a person enters into or upon property in the possession of another with intent to commit an offence or to intimidate, insult or annoy any person in possession of such property. The impugned order clearly is erroneous in as much as the Trial Court has framed the charge on the presumption that the complainant was in possession of the shop at that time. As there is no material to show that possession was parted with by the petitioner or handed over to the complainant, petitioner could not have been charged with the offence under Section 447 IPC.”

In such view of the matter, the petition was allowed and the charge framed against the petitioner was quashed. [Jagdish Kapila v. Raj Kumar, 2019 SCC OnLine Del 8617, decided on 21-05-2019]

Case BriefsHigh Courts

Kerala High Court: The Division Bench of Hrishikesh Roy and A.K. Jayasankaran Nambiar. JJ. dismissed a writ appeal filed by landlord against an order dispensing with the requirement of his consent, for renewal of his tenant’s trade licence.

A partnership firm (tenant) – Vijaya Jyothi Traders ­– had filed an application before the Thrissur Municipal Corporation for a D&O (Dangerous & Offensive) licence. The Corporation refused to consider this application on the ground that the application was not supported by landlord’s (appellant herein) consent which was the mandate under Sections 492(3) and 492(4) of the Kerala Municipality Act, 1994.

In a petition filed by the managing partner of the firm (respondent herein), it was averred that averred that since there were some disputes between him and the appellant-landlord, therefore obtaining consent letter from the landlord must not be insisted for consideration of the renewal of the licence. Learned Single judge allowed the petition and directed the Corporation to consider the subject application without insisting for consent from the appellant-landlord. Aggrieved thereby, the instant writ appeal was filed.

The Court noted that the learned Single Judge had taken note of pending suits between the landlord and tenant and had also provided an opportunity of hearing to both the parties. It relied on the judgment in Sudhakaran v. Corporation of Trivandrum, (2016) 14 SCC 263 where the Apex Court while deciding the on renewal of trade licence, stated that a tenant could not be deprived of running a lawful business merely because the landlord withheld his consent. A valid tenancy has implied the authority of the landlord for the legitimate use of the premises by the tenant.

In view of the above, the Court upheld the impugned judgment. [C.S. Babu v. C. Vijayan, 2018 SCC OnLine Ker 5783, Order dated 14-12-2018]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Vinod Goel, J. dismissed a revision petition filed against the order of the Additional Rent Controller whereby he allowed the eviction petition filed by the respondent-landlord under Section 14(1)(e) of the Delhi Rent Control Act, 1958.

The petitioner was a tenant of the respondent. The respondent, in the eviction petition filed by him, had sought ejectment of the petitioner from the suit property. the ground taken by him was a bona fide requirement. It was pleaded that the suit property was required by the respondent for expansion of the business. The petitioner, per contra, submitted that the said property was not suitable for expansion of business as sought by the respondent. the Additional Rent Controller, however, decreed the suit and passed the eviction orders against the petitioner. Aggrieved thereby, he filed the instant revision under Section 25-B of the DRC Act.

The High Court, while adjudicating on the matter, referred to a Supreme Court decision in Baldev Singh Bajwa v. Monish Saini, (2005) 12 SCC 778. It was observed that whenever a landlord seeks ejectment of a tenant for bona fide requirement, it shall be presumed to be genuine and bona fide. Furthermore, the burden to rebut the said presumption lies on the tenant; however, the mere assertion on part of the tenant does not suffice. In the instant case, the testimony of the respondent as to his bona fide requirement went unrebutted. In such view of the matter, the revision petition was dismissed and the order impugned was accordingly upheld. [Metro Bearings v. Faizunnisa, 2018 SCC OnLine Del 12313, Order dated 31-10-2018]

Case BriefsHigh Courts

Punjab and Haryana High Court: A Single Judge Bench comprising of Gurvinder Singh Gill, J., dismissed a revision petition filed assailing the order of the Appellate Authority which in turn upheld the order of Rent Controller, Ludhiana, whereby the petitioner was ejected from the property in question.

The respondent filed an ejectment petition before the Rent Controller on the grounds that the petitioner-tenant had defaulted in paying the rent since June 2008. The petitioner contended that the respondent was not the landlord as he had taken the premises on rent from one Narinder Singh. The Rent Controller found that a relationship between tenant and landlord existed between the parties. And since the petitioner defaulted in paying the rent, petitioner was ordered to be ejected from the property concerned. The Appellate Authority confirmed the findings and upheld the order passed by the Rent Controller. Feeling aggrieved, the petitioner approached the High Court.

The High Court perused the record and found that the abovementioned Narinder Singh, in his examination, had stated that he had sold the property concerned to the petitioner. A power of attorney and a Will was also executed in favor of the petitioner. The Court did not find any registered sale deed proving the factum of sale; however, the abovesaid documents showed that there was some arrangement between the petitioner and Narinder Singh whereby the petitioner exercised the rights of the landlord. The Court held the law to be well settled that a person can be a landlord even without having ownership rights in the property. The High Court did not find any infirmity in the impugned order and the revision petition was thereby dismissed. [Ashok Kumar v. Piara Singh, 2018 SCC OnLine P&H 733, dated 29-05-2018]

Case BriefsForeign Courts

Supreme Court of United Kingdom: In an appeal filed by a Landlord against the liability from failure to keep ‘paved area outside the building’ in repair as per the Section 11 of the Landlord and Tenant Act, 1985, the Court allowing the appeal, held that the landlord is not in breach of his statutorily implied obligation for carrying out repairs until he has the notice of the disrepair.

Section 11 of the 1985 Act applies to Sub-tenancy agreements and extends the landlord’s statutory repairing covenants to “keep in repair the structure and the exterior of the dwelling-house”. In the present case, the subtenant having tripped over an uneven stone on a paved way which was the main access to the building and suffered injuries, had brought action against the landlord for the breach of the provision. The Court of Appeals had allowed the case but in the present appeal the Court took a contrary view.

The Court held that the expressions of the obligations under the Section 11 should be given a natural meaning rather than an artificially wide one. It held that, the fact that a piece of property is a necessary means of access to a building cannot be sufficient for it to constitute part of the ‘exterior’ of that building. Therefore, the paved way did not fall within the ambit of the provision.  Moreover, the Court as an exception to the general principle upheld the rule that, the landlord is not liable under a covenant with his tenant to repair premises which are in the possession of the tenant and not of the landlord unless and until the landlord has notice of the disrepair. Relying on a number of cases which had earlier upheld the rule the Court held that the landlord  could only be held liable if he had had notice of the disrepair before the accident, which he did not have. In accordance with both the observation the appeal of the landlord was allowed. [Edwards  v. Kumarasamy  [2016] UKSC 40, decided on 13 July 2016]

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of Ranjan Gogoi, Arun Mishra and P.C.Pant, JJ, were hearing a reference to decide the question as to whether after the expiry of the fixed term tenancy in respect of an agricultural lease under the Punjab Security of Land Tenure Act, 1953, the tenancy gets automatically terminated and the person occupying the leased premises ceases to be a tenant, as a 2-judge bench did not agree with the decision of a coordinate bench in Sukhdev Singh v. Puran , (2015) 12 SCC 344 where it was held that tenant under the 1953 Act ceases to be one on expiry of the fixed term tenancy under the contract whereafter he is not entitled to the statutory protection from eviction as envisaged under the Act.

The Court held that to be entitled to protection from eviction under the 1953 Act any person claiming such protection has to come within the fold of the expression “tenant” under the 1953 Act read with the relevant provisions of the Punjab tenancy Act, 1887 Act. Statutory protection would be available only to a statutory tenant, namely, a tenant under the Act. The 1953 Act read with the relevant provisions of the 1887 Act does not include a tenant whose lease has expired. Nevertheless, retention/continuance of possession after expiry of the duration of the lease with the consent of the landlord will continue to vest in the erstwhile tenant the same status on the principle of holding over.

The Court, further held that such continuance even after expiry of the deemed period of the lease under Section 106 of the Transfer of Property Act, 1888 would clothe the occupant with the status of a tenant under the Act in view of Section 116 of the Transfer of Property Act which deals with the consequences of holding over. The operation of Section 116 of the Transfer of Property Act would confer legitimacy to the possession of the tenant even after the termination or expiration of the deemed period of the lease so as to confer on him a status akin to that of a statutory tenant and hence protection from eviction as envisaged by the provisions of the Act of 1953. [Shyam Lal v. Deepa Dass Chela Ram Chela Garib Dass, 2016 SCC OnLine SC 661, decided on 05.07.2016]