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CASE NO.: Appeal (civil)  5188 of 2005

PETITIONER: G. Reghunathan                                                   

RESPONDENT: K.V. Varghese                                                    

DATE OF JUDGMENT: 23/08/2005

BENCH: CJI R.C. LAHOTI & P.K. BALASUBRAMANYAN

JUDGMENT: J U D G M E N T  (ARISING OUT OF .S.L.P) NO.4189 OF 2004)

P.K. BALASUBRAMANYAN, J.

                        Leave granted.

1.              The tenant is before us.  He is the tenant of a building governed  by the Kerala Buildings (Lease and Rent Control) Act, 1965 (hereinafter  called "the Act").  He took on rent a room in the building belonging to the  respondent-landlord.   He executed an unregistered, insufficiently stamped  rent deed on 5.9.1988 which was accepted by the landlord.   He entered into  possession thereunder.   The  lease  was  taken for  the purpose of  conducting a  gold and silver  jewellery shop.   As per the rent deed,  the  term of the lease was 15 years.   The rent payable was Rs.750/- a month.   A  sum of Rs.85,000/- was given to the landlord as security.   That amount was  to be returned to the tenant when he vacated the room.  The monthly rent of  Rs.750/- was to be paid by the 5th of the succeeding month.   The tenant was  given the right to install electrical fittings and to take water and telephone  connections.   He had the right to install all necessary instruments or  equipments in the room for the purpose of gold and silver business.

2.              Disputes seem to have arisen immediately thereafter.   The  tenant did not tender the rent that fell due on 5.10.1988.   He removed a door  and three windows from the walls of the room and closed up those openings.   He cut-off the rafters in the front to a length of two feet.   He lowered the  level of the floor by one foot.   He erected two pillars touching the walls and  fixed a rolling shutter in front of the shop.  These were done without the  written permission of the landlord.     3.              The landlord issued a notice in terms of the proviso to Section  11(2) of the Act.  He called upon the tenant to pay the rent in arrears.  The  tenant failed to tender the rent.  He filed an application R.C.P. No.2 of 1990  before the Rent Controller for eviction of the tenant.   He invoked Section  11(2) of the Act pleading that the tenant had not paid or tendered the rent  due by him for the period from 5.10.1988 to 31.12.1990 in spite of the  statutory notice.   He also relied on the ground under Section 11(4)(ii) of the  Act.  He alleged that the tenant had used the building in such a manner as to  destroy or reduce its value or utility materially and permanently.   His case  was that by removing the door and the windows and by his other acts the  tenant has incurred the liability to be evicted under Section 11 (4) (ii) of the  Act.   The tenant resisted the application.  He pleaded that the landlord did  not cooperate with him in getting electricity and water connections and  refused to issue receipts for the rent he tendered.   Therefore, he had not paid  the rent.  He had not done anything in the building which materially affected  the value or utility of the building.   In fact, what he had done, had only

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made the building safe and enhanced its value.   He pleaded that he was not  liable to be evicted.  He also deposited the rent that was in arrears so as to  enable him to contest the proceedings.   4.              A commission was taken out.   The Commissioner visited the  shop in the presence of the tenant.   The Commissioner noted the relevant   features and also recorded what the tenant told him in respect of the removal  of the door and the windows.   He noted the lowering of the floor, the  erection of the pillars and the fixing of the rolling shutter.   The landlord  examined himself as PW 1.   He admitted the rent note.  He admitted that he  had received Rs.85,000/- as advance.   He pleaded that in spite of the  statutory notice, the tenant had not paid the rent.   He also spoke of the  alterations to the building brought about by the tenant.   The tenant, in his  evidence tried to justify the non payment of rent.   He deposed that what he  had done in the premises was only to facilitate the jewellery trade for which  the building was taken on rent.  He was entitled to do so on the terms of the  rent deed.  What he had done, was only to strengthen the premises.  The  value of the building has not been permanently or materially diminished.  He  was not liable to be evicted.

5.              The Rent Controller found that the rent note was inadmissible  in evidence.  It was a tenancy from month to month.  He found that the  tenant had defaulted payment of rent.   An order for eviction under Section  11(2) of the Act was liable to be passed.   The fact that he had deposited the  entire rent during the pendency of the proceedings, was relevant only for the  purpose of Section 11(2)(c) of the Act.  He found that the question of  material alteration had to be approached from the angle of the landlord.   From that angle, it was clear that by the closing of the windows and the  door, the amenity to the room had been destroyed by the tenant.   The fact  that such closing of the door and the windows was necessary to secure the  jewellery of the tenant was not relevant.  What had been done amounted to  material alteration within the meaning of Section 11(4)(ii) of the Act.   The  tenant was liable to be evicted.  He, thus, ordered eviction on both grounds.

6.              The tenant filed an appeal under Section 18 of the Act.   He  raised a fresh contention.   The term of the lease was 15 years.  The landlord  was not entitled to seek eviction before the expiry of that term.   The claim  for eviction was barred by Section 11(9) of the Act.   Since this aspect is not  agitated before us, it is only necessary to mention that this contention was  negatived by the Appellate Authority.  It held that since the rent deed was  unregistered, it was not admissible in evidence.   The tenant could not take  advantage of the term therein.  By payment and acceptance of rent, only a  tenancy from month to month has come into existence.  Therefore, the  application for eviction filed before the expiry of 15 years, was  maintainable.    

7.              As regards the claim under Section 11(2) of the Act, that  authority reiterated the reasoning of the Rent Controller and found that the  tenant had not tendered the rent or established that as a matter of fact, the  landlord had refused to issue a receipt for payment of the same.  It relied on  a notice issued by the tenant himself accusing the landlord of not  cooperating in his getting electrical and water connections and taking the  stand that he was not bound to pay the rent.   Regarding the claim under  Section 11(4) (ii) of the Act, it held that the alterations made by the tenant  came within the purview of that provision.  The order for eviction thereunder  was justified.    It dismissed the appeal.  

8.              The tenant filed a revision under Section 20 of the Act.   The  High Court, re-appraised the relevant materials.  It held that the application  for eviction was not premature and was maintainable.   It further held that  the order for eviction under Section 11(4)(ii) of the Act was sustainable.    There was no specific discussion on the order for eviction under Section  11(2) of the Act and the revision was dismissed and the orders for eviction  were confirmed.   This is what is challenged here.

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9.              First, the claim under Section 11(4)(ii) of the Act.   The  relevant provision in the Act reads :- "11(4)  A landlord may apply to the Rent Control  Court for an order directing the tenant to put the landlord  in possession of the building-  (i)             *****

(ii)    if the tenant uses the building in  such a manner as to destroy or  reduce its value or utility  materially and permanently."

For seeking eviction, the user should destroy or reduce the value or utility of  the building materially and permanently.  Even if the user leads to some  reduction in the value or utility of the building, eviction cannot be ordered.   But, if the value or utility is materially and permanently affected, an order  for eviction could be passed.   

10.             The Kerala High Court has interpreted this provision in the  context of a number of fact situations.  Ahammad Kanna Vs. Muhammed  Haneef, (1967 K.L.T. 841)  held that the demolition of any wall in a  building can be deemed to be an act of waste which is likely to impair  materially the value and utility of the building.  But that was not enough.   The Court had to see whether there was sufficient evidence to show that the  tenant had committed such acts of waste as to impair the value or utility of  the building.  It was found that the motive for the removal of the wall was  for convenience of trade.  Since it was not shown that any damage to the  building was caused by the removal of the wall and the boundary was not  obliterated, an order for eviction under Section 11(4)(ii) could not be  granted.  When the tenant destroyed a boundary wall, the decision in  "Ahammad Kanna" was distinguished and it was held in Ayissabeevi Vs.  Aboobaker (1971 K.L.T. 273) that the pulling down of a wall might or  might not amount to waste, and the question will depend upon the purpose  for which the wall was pulled down.  When the purpose was to remove the  boundary wall and that resulted in the obliteration of the boundary line and  the tagging on of the property with the adjoining property through the  medium of a corridor, it attracted Section 11(4)(ii) of the Act.  Shanmugam  Vs. Rao Saheb (1988 (1) K.L.T. 86) reiterated that there can be no hard and  fast rule that the removal of a wall or construction of a door or providing a  common verandah should, necessarily lead to an inference that there was  destruction or reduction of the value or utility.  Such acts of the tenant have  to be judged on the facts of each case.  Mere proof of reduction or even  destruction of utility or value was not sufficient and the words "materially  and permanently" were important.  The destruction or reduction of utility or  value of the building must be of a reasonably substantial magnitude.    Prabodhini Vs. Rajammal (1991 (1) K.L.J. 113) decided that the fixing of  a gate after removing a portion of the wall, could not be taken as an act  which destroyed or reduced the value or utility of the building.  Nor could it  be considered to be an act which materially affected the value or utility of  the building, that too, permanently.  In Thankappan Vs. Reji Xavier (1995  (1) K.L.J. 86) it was held that the removal of a ceiling attracted Section  11(4)(ii)  of the Act since the value of the building was not only reduced but  its utility was also materially and permanently reduced.  Mathew vs.  Gilbert (1998 (2) K.L.T. 19) held that the failure of the tenant to protect the  furniture in the building passed on to him with the letting of the building,  would not attract Section 11(4)(ii) of the Act.  In Aboobacker Vs. Nanu  (2001 (3) K.L.T. 815) it was held that on proof of minor destruction or  alteration even if it resulted in marginal reduction of value or utility, the  landlord could not get an order of eviction under Section 11(4)(ii) of the Act.  Seethalakshmi Ammal Vs. Nabeesath Beevi (2003 (1) K.L.T. 391) held  that the dismantling of the original roof followed by the substitution of a  new roof, the replacing of old walls by new walls, the old flooring by a new  flooring and the placing of shutters replacing the doors after practically  demolishing the old building, were acts that attracted Section 11(4) (ii) of  the Act.    

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11.             This Court had considered the scope of the analogous provision  in sister enactments.   The U.P.  Cantonments (Control of Rent and Eviction)  Act was involved in Manmohan Das Vs. Bishun Das (1967 (1) SCR 836).    Even if the alterations did not cause any damage to the premises or did not  substantially diminish its value, the alterations were material alterations.    On that basis alone, the landlord was entitled to evict the tenant.   That was  in the context of the provision which enabled a landlord to get an order for  eviction, if the tenant had, without the permission of the landlord, made any  construction which has materially altered the accommodation.   Eviction  could also be ordered even if that construction or alteration was likely to  substantially diminish the value of the building.  The difference with the  Kerala Act is that the two requirements were disjunctive.   It was enough to  satisfy either one of them.   It was clarified that although the expression  "material alteration" was not defined, the question would depend on the  facts of each case.   In that case the acts of the tenant were held to amount to  material alterations.   In Om Prakash Vs. Amar Singh (AIR 1987 SC 617)  interpreting the same provision, it was held that the question whether a  construction materially altered the accommodation was a mixed question of  fact and law.  The dictionary meaning of the expression "materially" and  "alter" were considered.  It was held to mean "a substantial change in the  character, form and the structure of the building without destroying its  identity".   It had to be seen whether the constructions were substantial in  nature and they altered the form, front and structure of the accommodation.    No exhaustive list of constructions that constitute material alteration could  be given.   The determination of that question depended on the facts of each  case.   On facts, it was held that there was no material alteration.   It was also  laid down that the construction of a temporary shed in the premises which  could easily be removed did not come within the mischief of the section.   Brijendra Nath Vs. Harsh Wardhan 1988 (2) SCR 124) held that the  construction of a wooden balcony in the showroom did not amount to  material alteration.  Replacing of wooden plank on the front door of the  building by a rolling shutter was held to be not an alteration that caused any  damage to the building and that was held not to provide a ground for  eviction in Arunachalam (died) through L.Rs. and another Vs.  Thondarperienambi and another (AIR 1992 SC 977).  In Vipin Kumar  vs. Roshan Lal Anand (1993 (2) SCC 614) a claim under Section 13(2) (iii)  of the East Punjab Urban Rent Restriction Act, 1949, it was held that the  impairment of the value or utility of the building was from the point of the  landlord and not of the tenant.  It had to be shown that there was impairment  of the building due to acts of the tenant and, secondly, it had to be shown  that the utility or value of the building had been materially impaired.   The  Court went on to say that the statute on proof of facts gave discretion to the  Court to order eviction.   The wording of the provision was "if the tenant has  committed such acts as are likely to impair the value or utility of the  building or rented land".   The Rent Controller had to independently  consider and exercise the discretion vested in him keeping in view the  proved facts to decree ejectment.   It was for the landlord to prove such facts  which warrant the Controller to order eviction in his favour.   In Waryam  Singh Vs. Baldev Singh (2003 (1) SCC 59) construing the same provision,  it was held that enclosing a verandah by constructing walls and placing a  rolling shutter in front, did not justify an inference that the value or utility of  the building had been impaired, in the absence of evidence led by the  landlord to prove that the value or utility had been affected.  So an order of  eviction could not be granted.  12.             From the above, it is clear that the question depends on the facts  of the case.  The nature of the building, the purpose of the letting, the terms  of the contract and the nature of the interference with the structure by the  tenant, are all relevant.  The destruction or damage has to be adjudged from  the stand point of the landlord.  Let us look at the facts in the present case.   The building is 75 years old.  According to the tenant, it is 80 years old.  The  difference is not of any significance.  It is the northern room in a building  consisting of a number of rooms.  It is let out for 15 years for a jewellery  trade.  The term has, of course, not come into effect for want of registration  of the deed.  The door in the western wall has been bricked up.  The

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windows on the northern, western and southern walls have also been bricked  up.  Obviously, the bricked up portions can be removed and the doors and  windows restored without weakening the structure.  But more importantly,  the level of the floor was lowered, the rafters cut, two concrete pillars  erected and a rolling shutter fixed.  The lowering of the floor and the  tampering with of the roof, is of some significance.  They could lead to  impairment of the value or utility of the building, materially and  permanently.  That again has to be judged in the light of the surrounding  circumstances.    But a rolling shutter has been fixed.  That provides more  security to the premises.  The height of the floor can be restored without  impairment to the structure.   Here, we find that the landlord has not even  pleaded that the alterations made by the tenant have destroyed or reduced the  value or utility of the building materially and permanently.  No doubt, he has  stated so in his evidence.  But the tenant has stated that, considering that it  was a jewellery business that was being started, these things had to be done.   Securing  of  the premises was essential.  He  had  given  to  the  landlord  Rs. 85,000/- as security to be returned, when he vacated the building.  The  value of the building, if at all, has only been enhanced.  In this state of the  record, it is not possible to infer that the acts of the tenant have materially  and permanently destroyed or reduced the value or utility of the building.   The age of the building cannot be ignored.    The purpose of the letting  cannot be ignored. 13.             We find that the Authorities below have not approached the  question from the proper perspective.  They have not given sufficient  emphasis to the statutory requirement of the effect being material and  permanent.  It is "material and permanent".  The words are not disjunctive,  like in some other Acts.  Here the landlord had not proved the material and  permanent impairment in value or utility.  One suspects that the value and  utility are enhanced.   The landlord admits that he will get a higher rent if the  room is again let out.  We are, therefore, satisfied that interference is  justified.  We hold that the landlord has failed to prove that the acts of the  tenant constitute the user of the building in such a manner as to destroy or  reduce the value or utility of the building materially and permanently.  We  set aside the order for eviction under Section 11(4) (ii) of the Act.   14.             Now, the claim under Section 11(2) of the Act.  There cannot  be any dispute that the tenant had not paid the rent from 5.10.1988 onwards  as claimed by the landlord.  He had deposited the rent in the proceeding.   If  he has done so, it is relevant only for considering the question whether he is  entitled to relief in terms of Section 11(2)(c) of the Act.  The only question  is whether the fact that he had paid a sum of Rs. 85,000/- as security, which  the landlord was liable to refund to him at the time of his vacating the room,  could be taken note of as an amount available with the landlord for being  adjusted against the rent due.  Under Section 8(1) of the Act, the landlord is  not entitled to take any premium or other like sum.  Under Section 8(2), he  could receive or stipulate for payment only, an amount not exceeding one  month’s rent by way of advance.  In both cases, if he has received it, it  becomes refundable at once.   Hence, it would be an amount available with  him.   In Issac Ninan Vs. State of Kerala (1995 (2) KLT 848) the High  Court has declared that provisions relating to fair rent, that is, Sections 5, 6  and 8 of the Act, put together, are ultra vires the Constitution of India and  are void.   The questions may have, therefore, to be considered without  reference to Section 8 of the Act.  In a case where a substantial amount had  been received as advance at the time of letting, which was liable to be  refunded without interest on the expiry of the lease, this Court held in  Modern Hotel Vs.  K. Radhakrishnaiah (1989) 2 SCC 686, that when the  amount of arrears of rent was smaller than the advance amount held by the  landlord on account of the tenant, there was no default in payment of rent  and the grant of eviction on the ground of arrears of rent was not justified.   This was reiterated in K. Narasimha Rao Vs. T.M. Nasimuddin Ahmed     (1996 (3) SCC 45).   For the purpose of this case, especially when the tenant  had pleaded that he had deposited the rent even while filing his objection in  the Rent Control Court, we do not think that it is necessary to pronounce  finally on this question.  We feel that it is only necessary to clarify that the  tenant will have two months from today to deposit the rent in arrears till date  and the other sums in terms of Section 11(2) (c) of the Act so as to avert the

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execution of the order for eviction on the ground of arrears of rent granted  under Section 11(2) of the Act.   15.             The appeal is, thus, allowed by setting aside the order of  eviction under Section 11 (4)(ii) of the Act and by granting the tenant time  of two months from today for averting the order of eviction under Section  11(2) of the Act by making the deposit (or by making up the needed deposit)  in terms of Section 11(2)(c) of the Act.  We make no order as to costs.