M/S SHAHA RATANSI KHIMJI & SONS Vs PROPOSED KUMBHAR SONS HOTEL P.LTD.
Bench: CHIEF JUSTICE,SUDHANSU JYOTI MUKHOPADHAYA,DIPAK MISRA
Case number: C.A. No.-000127-000127 / 2007
Diary number: 26660 / 2006
Advocates: VISHWAJIT SINGH Vs
GAURAV AGRAWAL
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 127 OF 2007
M/S SHAHA RATANSI KHIMJI & SONS … APPELLANTS
VERSUS
PROPOSED KUMBHAR SONS HOTEL P. LTD. & ORS. … RESPONDENTS
J U D G M E N T
SUDHANSU JYOTI MUKHOPADHAYA, J.
This appeal is directed against the judgment and decree
dated 18th July, 2006 passed by the High Court of Judicature at
Bombay in Second Appeal No. 109 of 2006. By the impugned
judgment, the High Court affirmed the concurrent finding of
the lower courts that the appellant’s tenancy right had lapsed
and dismissed the second appeal. 2. When the matter came before this Court, vide order dated
5th January, 2007, this Court referred the matter to a Bench of
three Judges. The said order reads as under:
“Apparently there seems to be inconsistency in the view taken by this Court in Vannattankandy Ibrayi Vs. Kunhabdulla Hajee [(2001) 1 SCC 564] and T.Lakshmipathi & Ors. Vs. R.Nithyananda Reddy & Ors. [(2003) 5 SCC 150].
Leave granted.
The matter shall be placed before a three Judge Bench.
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Status quo shall be maintained in the meanwhile.”
3. In the case of Vannattankandy Ibrayi Vs. Kunhabdulla
Hajee, (2001) 1 SCC 564, this Court formulated two questions
for consideration:
“(a) Whether the tenancy in respect of the premises governed by the Kerala Buildings (Lease and Rent Control) Act (hereinafter referred to as “the State Rent Act”) is extinguished by destruction of the subject-matter of tenancy i.e. the premises by natural calamities, and
(b) On the destruction of property whether the civil court has jurisdiction to entertain and try the suit for recovery of possession of land brought by the landlord.”
Both questions were answered in the affirmative.
4. In Lakshmipathi & Ors. Vs. R.Nithyananda Reddy & Ors.
(2003) 5 SCC 150, this Court held that lease of a building
includes, the land on which the building stands. So even if
the building is destroyed or demolished, the lease is not
determined as long as the land beneath it continues to exist.
Doctrine of frustration cannot be invoked on destruction or
demolition of a building under lease where not only privity of
contract but privity of estate is also created.
5. In the present case, the suit property comprises of Plot
No. 525, Shaniwar Peth, Karad in District Satara, Maharashtra.
There was a godown on the southern side of the suit property.
The eastern portion of the suit property was open and there
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was a road admeasuring 10 to 12 ft. from which the municipal
road could be accessed. On the northern portion of the suit
property, there was one RCC building. The northern 11/16th
portion of the suit property belonged to one Vinayak
Patwardhan whereas the southern 5/16th share, on which the
godown was constructed belonged to one Ujjwal Lahoti.
6. In or about 1961-62, the appellant firm took the godown
over the suit property on rent from Ujjwal Lahoti; Since then
the appellant has been continuously paying rent to Ujjwal
Lahoti and storing its goods in the godown. The appellant was
using the access on the eastern side of the godown for
approaching the municipal road and in bringing its goods to
the godown.
7. The case of the appellant is that the respondent had
purchased 11/16th share of Vinayak Patwardhan in Plot No. 525 by
two sale deeds dated 9th September, 1971 and 21st January, 1978,
After purchasing the plot, the respondent demolished the RCC
building existing over the property and started digging for
basement for construction of a hotel. Later, on 4th May, 1990,
the respondent purchased the remaining 5/16th share from Ujjwal
Lahoti.
8. Further case of the appellant is that the respondent(s)
without obtaining any requisite permission from the
municipality started digging a ditch towards the northern side
wall of the suit property, thereby exposing the northern base
of the godown to the vagaries of nature. The said ditch was
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nearly 13.6 ft. deep and exposed the entire base of the
godown. During the rainy season, water got accumulated in the
said ditch and the entire structure of godown was threatened.
It weakened the foundation of godown and subjected the entire
structure of godown to the danger of collapsing. When the
appellant inquired the respondent about the same, the
respondent asked the appellant to vacate the godown. The
respondent also threatened the workers of the appellant.
Therefore, according to the appellant, the excavation made by
the respondent was intentional and directed towards
terminating the tenancy of the appellant by adopting dubious
methods. It is also alleged that the respondent also closed
the access road to the suit property. Thus, the appellant was
unable to keep its goods in or take out its goods from the
suit property, causing irreparable loss to the appellant.
9. The appellant filed a Regular Civil Suit No. 211 of 1990
in the Court of IInd Jt.Civil Judge, J.D. Karad, at Karad. In
the said civil suit, the appellant prayed that the respondent
be restrained from closing the access of the appellant to the
suit property from the municipal road. The appellant further
prayed that the respondent be restrained from digging in a
manner which would cause damage to the godown.
10. In the said suit, initially ad interim injunction was
granted restraining the respondent from further digging the
suit property. Finally, on 28th May, 1990, ex-parte interim
injunction was vacated. Aggrieved by the same, the appellant
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filed a Misc. Civil Appeal No. 123 of 1990 before the IIIrd
Additional District Judge, Satara against the order passed in
RCS No. 211 of 1990.
11. The said appeal was also dismissed on 16th April, 1996. It
was alleged that the respondent thereafter went ahead with
further destruction of the godown and demolished the western
wall of the godown on 21st October, 1996. Aggrieved by the same,
the appellant moved an application for amendment of the plaint
bringing on record that on 21st October, 1996, the respondent
again pulled down some portion of the western wall of the
godown and due to the damage caused to base of the property,
during the rainy season the remaining walls also had
collapsed. The appellant sought amendment of the plaint and
inclusion of prayer to the effect that the respondent be
directed to reconstruct the walls by order of mandatory
injunction. The appellant further prayed that it may be
allowed to reconstruct the walls of the godown and the
respondent should not be allowed to destroy or disturb the
appellant from construction of the godown.
12. The amendment sought for by the appellant was initially
not allowed by the learned Civil Judge. The High Court by
order dated 15th March, 2002 in Civil Revision No. 447 of 2002
allowed the amendment.
13. The respondent filed written statement and additional
written statement in which one of the grounds was taken was
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that godown got demolished due to natural cause and not due to
the acts of the respondent.
14. By the Judgement and decree dated 30th August, 2002,
learned Civil Judge dismissed the suit filed by the appellant.
15. Being aggrieved by the judgement and decree passed by the
Trial Court, the appellant filed a Regular Civil Appeal No. 86
of 2002 before the learned Addl. District Judge, Karad. By
its judgement and order dated 30th November, 2005, the learned
Addl. District Judge, Karad dismissed the appeal of the
appellant.
16. Against the judgement and decree of the Learned
Additional District Judge, Karad, the appellant filed Second
Appeal No. 109 of 2006 before the High Court of Judicature at
Bombay. By its impugned judgement and decree dated 18th July,
2006, the High Court dismissed the second appeal on the ground
that the tenancy right of the appellant had lapsed and no
substantial question of law was involved in the appeal.
17. Learned counsel appearing for the appellant submitted
that even after the destruction of the tenanted premises, the
tenancy is not determined, and hence the appellant is entitled
to the benefit of Section 108(B)(e) of the Transfer of Property
Act, 1882 (hereinafter referred to as ‘the TP Act’). It was
contended that even if the tenanted premises is completely
destroyed and renders the tenanted premises substantially or
permanently unfit for the purpose for which it was let out,
the lease subsists till the tenant terminates the lease.
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18. In order to fully and appropriately appreciate the issue
involved in the present case, it is desirable to refer to the
relevant provisions of the Transfer of Property Act, 1882 (T.P.
Act for short).
19. Chapter V of the T.P. Act, 1882 deals with the lease of
immovable property. Section 105 of the T.P. Act defines ‘lease’
and the said definition is as under:
“105. Lease defined.- A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
Lessor, lessee, premium and rent defined. —The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.”
20. Section 108 of the T.P. Act explains the rights &
liabilities of lessor and lessee and provisions of the said
section relevant to the present case i.e. Section 108(B)(e)
reads as under:
“108. Rights and liabilities of lessor or lessee. – In the absence of a contract or local usage to the contrary, the lessor and the lessee of immovable property, as against one another, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased:-
(A) Rights and Liabilities of the Lessor
x x x x x
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(B) Rights and liabilities of the Lessee
(e) If by fire, tempest or flood, or violence of any army or of a mob, or other irresistible force, any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was let, the lease shall, at the option or the lessee, be void:
Provided that, if the injury be occasioned by the wrongful act or default of the lessee, he shall not be entitled to avail himself of the benefit of this provision;”
21. The lease of immovable property is determined by modes
stipulated under Sections 106 and 111 of the T.P. Act.
Section 111 of the T.P. Act reads as under:
“111. Determination of lease
A lease of immovable property determines-
(a) by efflux of the time limited thereby,
(b) where such time is limited conditionally on the happening of some event-by the happening of such event,
(c) where the interest of the lessor in the property terminates on, or his power to dispose of the same extends only to, the happening of any event-by the happening of such event,
(d) in case the interests of the lessee and the lessor in the whole of the property become vested at the same time in one person in the same right,
(e) by express surrender, that is to say, in case the lessee yields up his interest under the lease to the lessor, by mutual agreement between them,
(f) by implied surrender,
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(g) by forfeiture; that is to say, (1) in case the lessee breaks an express condition which provides that, on breach thereof, the lessor may re-enter; or (2) in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself; or (3) the lessee is adjudicated an insolvent and the lease provides that the lessor may re-enter on the happening of such event; and in any of these cases the lessor or his transferee gives notice in writing to the lessee of his intention to determine the lease,
(h) on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased, duly given by one party to the other.”
22. Immovable property means landed property and may include
structures embedded in the earth such as walls or buildings
for the permanent beneficial enjoyment. A lease of immovable
property is a transfer of right to enjoy such property in
consideration of price paid as per Section 105 of the T.P. Act.
By way of lease, a right and interest is created which stands
transferred in favour of the lessee. The immovable property,
thereafter, only can be reverted back on determination of such
right and interest in accordance with the provisions of the
T.P. Act. Therefore, once the right of lease is transferred in
favour of the lessee, the destruction of a house/building
constructed on the lease property does not determine the
tenancy rights of occupant which is incidental to the contract
of the lease which continues to exist between the parties.
23. The Kerala High Court in V. Kalpakam Amma vs. Muthurama
Iyer Muthurkrishna Iyer, AIR 1995 Kerala 99, held that there
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cannot be a building without a site and once a structure is
put up in the land the site becomes the part of the structure
and, thereafter the site becomes part of the building. The
Court further held:
“14. The Supreme Court had also occasion to consider the meaning of the word ‘building’ in D.G. Gouse and Co. v. State of Kerala (1980) 2 SCC 410: (AIR 1980 SC 271). It was a case challenging the constitutionality of the Kerala Building Tax Act, 1975. Paragraph 21 of the judgment deals with the definition of the word ‘building’. It read thus:-
“The word “building” has been defined in the oxford Dictionary as follows:
That which is built; a structure, edifice; now a structure of the nature of a house built where it is to stand.
Entry 49 of Schedule VII of the Constitution of India therefore includes the site of the building as its component part. That, if we may say so, inheres in the concept or the ordinary meaning of the expression “building”.
15. A somewhat similar point arose for consideration in Corporation of the City of Victoria v. Bishop of Vancouver Island, AIR 1921 PC 240 with reference to the meaning of the word “building” occurring in Section 197 (1) of the Statutes of British Columbia 1914. It was held that the word must receive its natural and ordinary meaning as “including the fabric or which it is composed, the ground upon which its walls stand and the ground embraced within those walls”. That appears to us to be the correct meaning of the word ‘building’.
15A. In Stroud’s Judicial Dictionary (Vol.I. 5th Edn.), the word ‘building’ is defined thus: “What is a building must always be a question of degree and circumstances”. In Black’s Law Dictionary (5th Edn.), the meaning of the word building is given as follows: “A structure or edifice enclosing a space within its walls, and usually, but not necessarily, covered with a roof”. In Bourvier’s Law Dictionary (A Concise Encyclopedia of the Law Vol.I. 3rd Revision) the meaning of building is given as “an edifice, erected by art, and fixed
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upon or over the soil, composed of brick, marble, wood, or other proper substance, connected together, and designed for use in the position in which it is so fixed.”
16. The above are some of the natural meanings that are given to the word ‘building’. Adopting the above meaning, the word ‘building’ must take in the site also, as part of it. If that is so, without site, there cannot be a structure and the site becomes an integral part of the building. Without a site, the super structure of the building on the land cannot normally exist. Thus, when there is a lease of a building, such lease would normally take in the site unless it specifically excluded from the land.”
24. Similar issue was considered by the Bombay High Court in
Hind Rubber Industries (P) Ltd. vs. Tayebhai Mohammedbhai
Bagasarwalla, AIR 1996 Bom. 389. In the said case, the High
Court observed as under:
“16. In my view, the correct legal position in this country appears to be that the destruction of the tenanted structure does not extinguish the tenancy and the right of occupation of the tenant under the contract of tenancy continues to exist between the parties. Merely because the tenanted structure has been destroyed or demolished, the right transferred under the lease cannot be said to have come to an end, and the relationship of lessor and lessee continues to exist. The destruction of the tenanted premises does not destroy the tenancy rights nor does it bring to an end the relationship of lessor and lessee or for that matter landlord and tenant. The lessee continues to be lessee in the property leased even after its destruction by fire or such like event unless the lessee exercises his option of treating such lease as void. It may be observed that Section 108 of the T.P. Act deals with the rights and liabilities of lessor and lessee and Part-B and clause (e) of Section 108 provides that if the property leased in wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was leased by fire, tempest or flood or violence of any army
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or of a mob or other irresistible force, such lease may be rendered void at the option of the lessee provided of course that such injury to the lease property has not been occasioned by the wrongful act or default of the lessee. That means that right of the lessee in the leased property subsists even if the leased properly has been destroyed by fire, tempest or flood or violence of an army or of a mob or other irresistible force unless the lessee exercises his option that on happening of such events the lease has been rendered void. By necessary corollary, therefore, if the leased property is destroyed wholly by fire, the lease cannot be said to be extinguished, nor can it be said that lessee's right in the leased property has come to an end unless the lessee exercises such option. The express provision in clause (e) of Section 108 leaves no manner of doubt that on destruction of leased property by fire, the lease cannot be said to be extinguished, automatically and in this view of the matter the statement of law made in Article 592 of American Jurisprudence and para 2066 of Woodfall on landlord and tenant and relied upon by the learned counsel for the Plaintiff/Respondent cannot be applicable in our country. The view of the Kerala High Court in Dr. V. Siddharthan's case: (supra) is also not acceptable because of no proper construction given to Section 108(e) of the T.P. Act.”
25. Adverting to one of the situations similar to that, now
before us, the two Judge-Bench of this Court in Vannattankandy
Ibrayi (supra) observed as under:
“20. From the aforesaid decisions there is no doubt that if a building is governed by the State Rent Act the tenant cannot claim benefit of the provisions of Sections 106, 108 and 114 of the Act. Let us test the arguments of learned counsel for the appellant that on the destruction of the shop the tenant can resist his dispossession on the strength of Section 108(B)(e). In this case what was let out to the tenant was a shop for occupation to carry on business. On the destruction of the shop the
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tenant has ceased to occupy the shop and he was no longer carrying on business therein. A perusal of Section 108(B)(e) shows that where a premises has fallen down under the circumstances mentioned therein, the destruction of the shop itself does not amount to determination of tenancy under Section 111 of the Act. In other words there is no automatic determination of tenancy and it continues to exist. If the tenancy continues, the tenant can only squat on the vacant land but cannot use the shop for carrying on business as it is destroyed and further he cannot construct any shop on the vacant land. Under such circumstances it is the tenant who is to suffer as he is unable to enjoy the fruits of the tenancy but he is saddled with the liability to pay monthly rent to the landlord. It is for such a situation the tenant has been given an option under Section 108(B) (e) of the Transfer of Property Act to render the lease of the premises as void and avoid the liability to pay monthly rent to the landlord. Section 108(B)(e) cannot be interpreted to mean that the tenant is entitled to squat on the open land in the hope that in future if any shop is constructed on the site where the old shop existed he would have right to occupy the newly-constructed premises on the strength of original contract of tenancy. The lease of a shop is the transfer of the property for its enjoyment. On destruction of the shop the tenancy cannot be said to be continuing since the tenancy of a shop presupposes a property in existence and there cannot be subsisting tenancy where the property is not in existence. Thus when the tenanted shop has been completely destroyed, the tenancy right stands extinguished as the demise must have a subject- matter and if the same is no longer in existence, there is an end of the tenancy and therefore Section 108(B)(e) of the Act has no application in case of premises governed by the State Rent Act when it is completely destroyed by natural calamities.”
23. In V. Kalpakam Amma(supra) the Kerala High Court relying upon the definition of “building” in the State Rent Act held that there cannot be a building without a site and once a structure is put up in the land the site becomes part of
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the structure and thereafter the site becomes part of the building and on that basis the High Court held that once the premises covered by the State Rent Act is raised to the ground the tenancy continues to survive in respect of the vacant land. In our view this is not the correct interpretation of Section 2(1) of the State Rent Act. Section 2(1) uses the words “part of a building or hut”. The words “part of the building” do not refer to the land on which the building is constructed but refer to any other superstructure which is part of that main building e.g. in addition to the main building if there is any other superstructure in the said premises i.e. motor garage or servant quarters then the same would be part of the building and not the land on which the building has been so constructed. So far the appurtenant land which is beneficial for the purpose of use of the building is also a part of the building. Thus according to the definition of “building” in the State Rent Act the building would include any other additional superstructure in the same premises and appurtenant land. We are, therefore, of the view that the interpretation put by the Kerala High Court on Section 2(1) for holding that the words “part of a building” mean the land on which the building has been constructed is not correct. The provisions of the State Rent Act clearly show that the State Rent Act is a self-contained Act and the rights and liabilities of landlord and tenant are determined by the provisions contained therein and not by the provisions of the Transfer of Property Act or any other law. The rights of a landlord under the general law are substantially curtailed by the provisions of the State Rent Act as the Act is designed to confer benefit on tenants by providing accommodation and to protect them from unreasonable eviction. In the present case what we find is that the subject-matter of tenancy was the shop room which was completely destroyed on account of accidental fire and it was not possible for the tenant to use the shop for which he took the shop on rent. After the shop was destroyed the tenant, without consent or permission of the landlord, cannot put up a new construction on the site where the old structure stood. If it is held that despite the destruction of the shop, tenancy over the
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vacant land continued unless the tenant exercises his option under Section 108(B)(e) of the Act the situation that emerges is that the tenant would continue as a tenant of a non- existing building and liable to pay rent to the landlord when he is unable to use the shop. The tenancy of the shop, which was let out, was a superstructure and what is protected by the State Rent Act is the occupation of the tenant in the superstructure. If the argument of the appellant’s counsel is accepted then it would mean that although the tenant on the destruction of the shop cannot put up a new structure on the old site still he would continue to squat on the vacant land. Under such situation it is difficult to hold that the tenancy is not extinguished on the total destruction of the premises governed by the State Rent Act. Under English law, in a contractual tenancy in respect of building and land the liability to pay the rent by the tenant to the landlord continues even on the destruction of the building whereas there is no liability of the tenant to pay rent to the landlord on the destruction of the premises governed by the State Rent Act. Therefore, the view taken by the Bombay High Court in Hind Rubber Industries (P) Ltd.(supra) does not lay down the correct view of law. This Court a number of times has held that any special leave petition dismissed by this Court without giving a reason has no binding force on its subsequent decisions. Therefore, the two aforesaid cases relied on by counsel for the appellant are of no assistance to the argument advanced by him.
24. However, the situation would be different where a landlord himself pulls down a building governed by the State Rent Act. In such a situation the provisions contained in Section 11 of the State Rent Act would be immediately attracted and the Rent Control Court would be free to pass an appropriate order.
25. Coming to the next question whether the civil court was competent to entertain and try the suit filed by the respondent for recovery of possession of the vacant land. As already stated above, the tenancy in the present case was of a shop room which was let out to the tenant. What is protected by the State Rent Act is the occupation of the tenant in the superstructure. The subject-matter of tenancy
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having been completely destroyed the tenant can no longer use the said shop and in fact he has ceased to occupy the said shop. Section 11 of the State Rent Act does not provide for eviction of the tenant on the ground of destruction of the building or the superstructure. Thus when there is no superstructure in existence the landlord cannot claim recovery of possession of vacant site under the State Rent Act. The only remedy available to him is to file a suit in a civil court for recovery of possession of land. In view of the matter the civil court was competent to entertain and try the suit filed by the respondent landlord.”
26. Subsequently, another two-Judge Bench of this Court
considered the same question in T. Laxmipathi(Supra). In the
said case this Court noticed the decision of Bombay High Court
in Hind Rubber Industries (supra) and other High Courts and
observed as under:
“20. The tenancy cannot be said to have been determined by attracting applicability of the doctrine of frustration consequent upon demolishing of the tenancy premises. Doctrine of frustration belongs to the realm of law of contracts; it does not apply to a transaction where not only a privity of contract but a privity of estate has also been created inasmuch as lease is the transfer of an interest in immovable property within the meaning of Section 5 of the Transfer of Property Act (wherein the phrase “the transfer of property” has been defined), read with Section 105, which defines a lease of immovable property as a transfer of a right to enjoy such property. (See observations of this Court in this regard in Raja Dhruv Dev Chand v. Raja
Harmohinder Singh6.) It is neither the case of the appellants nor of Respondents 2 and 3 that the subject-matter of lease was the building and the building alone, excluding land whereon the building forming the subject-matter of tenancy stood at the time of creation of lease.
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22. A lease of a house or of a shop is a lease not only of the superstructure but also of its site. It would be different if not only the site but also the land beneath ceases to exist by an act of nature. In the present case the appellants who are the successors of the tenancy right have demolished the superstructure but the land beneath continues to exist. The entire tenancy premises have not been lost. Moreover, the appellants cannot be permitted to take shelter behind their own act prejudicial to the interest of Respondent 1 under whom Respondents 2 and 3 were holding as tenants and then inducted the appellants.
24. We are, therefore, of the opinion that in the event of the tenancy having been created in respect of a building standing on the land, it is the building and the land which are both components of the subject-matter of demise and the destruction of the building alone does not determine the tenancy when the land which was the site of the building continues to exist; more so when the building has been destroyed or demolished neither by the landlord nor by an act of nature but solely by the act of the tenant or the person claiming under him. Ample judicial authority is available in support of this proposition and illustratively we refer to George J. Ovungal v. Peter [AIR 1991 Ker 55], Rahim Bux v. Mohd. Shafi [AIR 1971 All 16], Hind Rubber Industries (P) Ltd. (supra) and Jiwanlal & Co. v. Manot & Co. Ltd.[(1960)64 CWN 932]. The Division Bench decision of the Kerala High Court in V. Sidharthan (Dr) v. Pattiori Ramadasan appears to take a view to the contrary. But that was a case where the building was totally destroyed by fire by negligence of the tenant. It is a case which proceeds on very peculiar facts of its own and was rightly dissented from by the Bombay High Court in Hind Rubber Industries (P) Ltd. v. Tayebhai Mohammedbhai Bagasarwalla.”
27. After referring to the aforesaid two authorities, we are
required to scrutinize which view is in consonance with the
statutory provisions enshrined under the Transfer of Property
Act. We have already referred to the statutory provisions
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that control the relationship between the lessor and the
lessee, the definition of lease as engrafted under Section
105, the rights and liabilities of lessor and lessee
enshrined under Section 108 and the conceptual circumstances
and the procedure which find mention for determination of
lease under Section 111 of the Act.
28. In Vannattankandy Ibrayi (supra) the learned Judges
referred to the decision on common law, the principles in
American jurisprudence, and various decisions of the High
Courts and adverted to two categories of tenants, namely, a
tenant under the Transfer of Property Act and the other under
the State Rent Laws and proceeded to interpret Section 108 (B)
(e) to hold that where a premises has fallen down under the
circumstances mentioned therein, the destruction of the shop
itself does not amount to determination of tenancy under
Section 111 of the Act and there is no automatic determination
of tenancy and it continues to exist. If the tenancy
continues, the tenant can only squat on the vacant land but
cannot use the shop for carrying on business as it is
destroyed and further he cannot construct any shop on the
vacant land. Under such circumstances it is the tenant who is
to suffer as he is unable to enjoy the fruits of the tenancy
but he is saddled with the liability to pay monthly rent to
the landlord. It is for such a situation the tenant has been
given an option under Section 108(B)(e) of the Transfer of
Property Act to render the lease of the premises as void and
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avoid the liability to pay monthly rent to the landlord. Taking
note of this facet, the Court proceeded to rule that Section
108(B)(e) cannot be interpreted to mean that the tenant is
entitled to squat on the open land in the hope that in future
if any shop is constructed on the site where the old shop
existed he would have right to occupy the newly-constructed
premises on the strength of original contract of tenancy
because lease of a shop is the transfer of the property for
its enjoyment and on destruction of the shop the tenancy
cannot be said to be continuing since the tenancy of a shop
presupposes a property in existence and there cannot be
subsisting tenancy where the property is not in existence. It
was further laid down that when the tenanted shop has been
completely destroyed, the tenancy right stands extinguished as
the demise must have a subject-matter and if the same is no
longer in existence, there is an end of the tenancy.
29. As we notice from the aforesaid analysis it is founded on
an interpretation of Section 108 (B) (e) by assuming when a
building or structure is leased out, it is the superstructure
that is leased out in exclusivity. As we perceive, the
language employed in Section 108 (B) (e) does not allow such a
construction. The singular exception that has been carved out
is the wrongful act or default on the part of the lessee which
results in the injury to the property that denies the benefit.
In all other circumstances which find mention under Section 111
of the Act, are the grounds for determination of the lease.
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This is the plainest construction of the provision and there
is no other room for adding to or subtracting anything from
it. Be it stated, Section 108 postulates the rights and
liabilities of lessor and lessee. If a right is not conferred
by the Statute on the lessor for determination, except one
exception which is clearly stipulated there in Section 108 (B)
(e) by the Legislature, it would not be permissible for the
Court to add another ground of the base or fulcrum of
ethicality, difficulty or assumed supposition.
30. In T. Lakshmipathi’s case, the Court referred to the
observations made by a three-Judge Bench in Raja Dhruv Dev
Chand v. Harmohinder Singh and another, AIR 1968 SC 1024
wherein it has been held that doctrine of frustration belongs
to the realm of law of contracts; it does not apply to a
transaction where not only a privity of contract but a privity
of estate has also been created inasmuch as lease is the
transfer of an interest in immovable property within the
meaning of Section 5 of the Transfer of Property Act. In the
said case, it has been further opined that under a lease of
land there is a transfer of right to enjoy that land. If any
material part of the property be wholly destroyed or rendered
substantially and permanently unfit for the purpose for which
it was let out, because of fire, tempest, flood, violence of
an army or a mob, or other irresistible force, the lease may
at the option of the lessee, be avoided and that is the rule
incorporated in Section 108 (e) of the Transfer of Property
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21
Act and applies to leases of land, to which the Transfer of
Property Act applies.
31. It is apt to note here that when there is a lease of a
house or a shop it cannot be treated as a lease of structure
but also a lease of site. The Court referred to the decision
in D.G. Gose & Co. (Agents) (P) Ltd. v. State of Kerala (1980)
2 SCC 410 wherein this Court held that the site of the build-
ing is a component part of the building and, therefore, in-
heres in it the concept or ordinary meaning of the expression
“building”. The Court also placed reliance on Corpn. of the
city of Victoria v. Bishop of Vancouver Island AIR 1921 PC 240.
32. It has been further opined that once a tenancy is created
in respect of a building standing on the land it is the build-
ing and the land which are both components of the subject-mat-
ter of demise and the destruction of the building alone does
not determine the tenancy when the land which is the site of
the building continues to exist. This interpretation, as we
find, is in accord with Section 108 of the Act. It is re-
flectible that in Vannattankandy Ibrayi’s case, the two-Judge
Bench observed that the rights stand extinguished as on the
distinction of the demise, for there is destruction of the su-
perstructure and in its non-existence there is no subject mat-
ter. Thus, the land has been kept out of the concept of sub-
ject matter. In our considered opinion, the Court in the said
case failed to appreciate that there are two categories of
subject-matters, combined in a singular capsule, which is the
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22
essence of provision under the Transfer of Property Act and
not restricted to a singular one, that is, the superstructure.
In T. Lakshmipathi (supra) the Court took note of the fact that
the land and superstructure standing on it as a singular com-
ponent for the purpose of tenancy. It is in tune with the
statutory provision. Therefore, we agree with the proposition
stated therein to the affect that “in the event of the tenancy
having been created in respect of a building standing on the
land, it is the building and the land which are both compo-
nents of the subject-matter of demise and the destruction of
the building alone does not determine the tenancy when the
land which was the site of the building continues to exist”.
On the touchstone of this analysis, we respectfully opine that
the decision rendered in Vannattankandy Ibrayi (supra) does
not correctly lay down the law and it is, accordingly, over-
ruled.
33. In the present case, it is not in dispute that the
respondent purchased the lessor’s interest. The lease continued
even thereafter and did not extinguish. The lease was
subsisting when the shares of the land were purchased by the
respondent. But the interest of the lessee was not purchased
by the respondent. What has been purchased by the respondent
is the right and interest of ownership of the property. The
interest of the appellant as lessee has not been vested with
the respondent. Therefore, we are of the view that the tenancy
of the appellant cannot be said to have been determined
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23
consequent upon demolition and destruction of the tenanted
premises.
34. In view of the fact and circumstances of the case, we
have no other option but to set aside the impugned judgment
and decree dated 18th July, 2006 passed by the High Court of
Judicature at Bombay in Second Appeal No. 109 of 2006 and
Judgment and decree dated 30th November, 2005 passed by the
Addl. District Judge, Karad in RCA No. 86 of 2002. However,
taking into consideration the fact that the appellant is not
in possession of the suit property since long, we are not
inclined to direct restoration of possession of suit property
to the appellant. Instead we direct the respondent to pay a
sum of Rs. 20,00,000/- (Rupees Twenty Lakhs only) in favour of
the appellant towards compensation for depriving the appellant
from enjoying the suit property, within two months, failing
which it shall be liable to pay interest @ 6% per annum from
the date of the judgment.
35. The appeal is allowed with the aforesaid observation and
direction. No costs.
…………………………………………………………………CJI. (R.M.LODHA)
………………………………………………………………………J. (SUDHANSU JYOTI MUKHOPADHAYA)
………………………………………………………………………J.
(DIPAK MISRA)
NEW DELHI,
JULY 10, 2014.