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CASE NO.: Appeal (civil)  5751 of 2005

PETITIONER: Hari Rao                                                         

RESPONDENT: N. Govindachari & Ors.                                   

DATE OF JUDGMENT: 15/09/2005

BENCH: B.N. SRIKRISHNA & P.K. BALASUBRAMANYAN

JUDGMENT: J U D G M E N T  [Arising out of Special Leave Petition (Civil) No. 24112 of 2002]

P.K. BALASUBRAMANYAN, J.

1.              Leave granted.

2.              A room in a building in Thousand Lights, Mount Road  Madras, is the subject matter of this proceeding.  The respondent-landlord  leased that room, a ’building’ as defined in the Tamil Nadu Buildings  (Lease and Rent Control) Act, 1960 to the appellant.  According to the  landlord, the letting was for the purpose of a shoe trade or trade in leather  goods by the tenant.  There was a prior proceeding in which there was a  compromise and the building was re-let to the tenant after it was re- modeled or re-constructed.  While carrying on his business, the tenant had  used a part of the premises for carrying on a trade in readymade garments  and that amounted to a user of the building by the tenant for a purpose  other than  that for which it was leased, within the meaning of Section 10  (2) (ii) (b) of the Act.  The tenant had also fixed name-boards outside and  drilled two holes in the walls for fixing racks for the purpose of his trade  and had taken an independent three phase electric connection and for that  purpose he had made holes on the floor and on the wall; that these acts of  the tenant amount to commission or causing the commission of such acts  of waste as are likely to impair materially, the value or utility of the  building within the meaning of Section 10 (2) (iii) of the Act.  Thus, the  landlord claimed eviction of the tenant, the appellant, on these two  grounds.

3.              The appellant resisted the claim.  He contended that the  original letting was not for the purpose of trade in shoes or leather goods  alone.  He was still carrying on the business of selling shoes, but had  expanded his trade by including the trade in readymade garments.  There  was no user of the room by him for a purpose other than the purpose for  which it was let.  He was not liable to be evicted on that ground.  The  fixing of the sign-boards was permitted by the landlord and fixing of the  boards or the fixing of the racks for the purpose of his trade, did not  amount to acts of waste as are likely to impair materially the value and  utility of the building.    He had to take the electric connection, a three  phase one, for the purpose of his trade and that act again did not result in  any damage to the building or amount to waste and hence he was not  liable to be evicted on that ground as well.  He thus prayed for dismissal  of the petition for eviction.  

4.              In addition to marking Ex. A1, to A4, the landlord examined  himself as P.W.1 and examined the Engineer who prepared Ex. A4 report

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as P.W. 2.    The tenant marked Ex. B1- letter and Ex. B2-report and  examined himself as R.W.1 and examined the engineer who prepared Ex.  B2- report as R.W.2.  According to him, Exhibit B1 indicated that there  was no restriction on his user of the premises.  The Rent Controller held  that the user of the building also for the purpose of carrying on a trade in  readymade garments, amounted to using the building for a purpose other  than that for which the building was let within the meaning of Section 10  (2) (ii) (b) of the Act and an order for eviction was liable to be passed  thereunder.   He also held that the fixing of the sign-boards, the fixing of  the racks and the taking of an independent three phase electric connection  by drilling holes for that purpose, amounted to commission of waste in the  building attracting Section 10 (2) (iii) of the Act.   Thus, eviction was  ordered both under Section 11(2)(ii)(b) and under Section 11 (2) (iii) of  the Act.  The tenant appealed.    The Appellate Authority found that the  user by the tenant  of the building also for the purpose of a retail trade in  readymade garments, did not amount to user of the building for a purpose  other than that for which the building was let and consequently, held that  the landlord was not entitled to an order for  eviction under Section 10 (2)  (ii) (b) of the Act.   The Appellate Authority further held that the fixing of  the sign-boards,  the fixing of the racks and the taking of an independent  three phase connection did not amount to commission of waste by the  tenant attracting Section 11 (2) (iii) of the Act.   Thus, the Appellate  Authority found that the landlord has not made out his claim for eviction  on the two grounds he had put forward.  It reversed the decision of the  Rent Controller and dismissed the eviction  petition.   The landlord  filed   a revision  before  the  High Court  challenging the  legality,  regularity  and propriety of the order of the Appellate Authority.  The High Court  held that the Rent Controller was correct in ordering eviction on the facts  established in the case and the decision of the Appellate Authority was  liable to be reversed.  The High Court, thus, allowed the revision and  setting aside the decision of the Appellate Authority, restored the order for  eviction passed by the Rent Controller.  The decision of the High Court  thus rendered, is challenged in this appeal at the instance of the tenant.   

5.              Admittedly, the building was let out for the purpose of  carrying on of a trade by the tenant.  There is no lease deed executed by  the parties evidencing the transaction.  The evidence indicates that at the  relevant time, the tenant wanted to start a business in sale of leather  goods, particularly shoes, and for that purpose he took the building on  lease.  Exhibit B-1 letter, written by the landlord to tenant referred to and  quoted by the Rent Controller, shows that the tenant was entitled to  ’continue the tenancy with the present increased rent, on the premises,  with all tenancy rights including the rights of putting up boards and  painting on the walls of the portion of the premises, No. 638 at Mount  Road, Madras-6 under your occupation’.  In his evidence as P.W.1, the  landlord stated that he had let out the premises for running a shoe-mart  and he had not entered into any other agreement permitting the tenant to  sell readymade garments in the premises.  But, there was an agreement to  allow him to sell decoration materials but the tenant was not selling them.   There was also a permission to sell fancy goods but that represented only  leather goods.  Chappals and socks as well as shoes could be sold from  the premises.  There  was no agreement by which the tenant was permitted  to sell clothes and T-shirts.  In his petition for eviction, the landlord had  only stated that the tenant had taken the building on lease for the purpose  of running a shoe-mart but the tenant had converted a portion of the shop  for selling readymade dresses and this amounted to user of the shop by the  tenant for a purpose other than that for which it was leased.  This was  disputed  by the tenant in his objection, who took the stand that it was  generally for the purpose of his trade that the building was let,  though, at  the relevant time, he was only conducting a trade in shoes.  There was no  violation by him of any term of the letting and there was no user of the  shop for a purpose other than the purpose for which it was let out to him.   It is necessary to notice here that there was no plea of the tenant having  covenanted not to use the building for any other trade.  

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6.              On the plain terms of the statute, uninfluenced by authorities,  it appears to us that user of the building for a purpose other than that for  which it was leased, has to be considered in the context of Section 21 of  the Act which prohibits conversion of a residential building into a non- residential building except with the permission in writing of the  controller, any covenant in that behalf entered into by the tenant and the  nature of the tenancy.  In other words, when the lease is granted for the  purpose of a trade, in the absence of any covenant in the contract between  the parties prohibiting a user different from the particular one mentioned  in the lease deed, the tenant would be entitled to carry on any trade in the  premises, consistent with the location and the nature of the premises.  In a  case where the premises let out for a commercial purpose, is used by the  tenant for a residential purpose, it would be a user for a purpose other than  that for which it was leased attracting Section 10 (2) (ii) (b) of the Act.   Similarly, if a building had been let out for the purpose of a trade, but  a  tenant uses the premises for the purpose of manufacture or production of  materials after installing machinery, that would be a user other than the  one for which the building was let.  User of a building let out for a trade  as a godown may attract the provision.  Ultimately, the question would  depend upon the facts of a particular case, in the context of the terms of  the letting and the covenants governing the transaction and the general  spirit of Section 108(o) of the Transfer of Property Act.  Merely because a  shop let out for trade in shoes and other leather goods, is used by the  tenant also for the purpose of trading in readymade garments, it could not  be held to be a user  by the tenant of the premises for a purpose other than  that for which it was leased.  It has to be noted that even now, the tenant is  carrying on the business of trading in shoes, which according to the  landlord was the purpose for which the building was let.  The trade in  shoes has not been stopped by the tenant.  All that has happened is, that he   has also diversified into selling some readymade garments or T-shirts, the  manufacture of which even some of the manufacturers of shoes have  taken up.   

7.              Learned counsel for the landlord placed considerable reliance  on the decision in M. Arul Jothi & anr. Vs. Lajja Bal (Deceased) and  Anr.[(2000) 3 SCC 723].  That case also arose under Section 10 (2) (ii)  (b) of the Act.  The transaction between the parties was governed by a  lease deed.  The tenant covenanted that the premises, "shall be used by the  tenant for carrying on his own business \005 and the tenant shall not carry  on any other business than the above said business."  The business  intended was dealing in radios, cycles, fans, clocks and steel furniture.   Subsequently, the tenant also started a trade in provisions (spices and dals  etc.).  The landlord sought eviction and the courts below ordered eviction  under Section 10 (2) (ii) (b) of the Act.  The tenant had appealed to this  Court.  This Court referred to the earlier decisions of this Court including  the one in M.K. Palaniappa Chettiar Vs. A. Pennuswami Pillai [(1970)  2 SCC 290].  It also referred to Section 108 (o)  of the Transfer of  Property Act.   This Court distinguished the various decisions brought to  its notice under other sister enactments and took the view that the  covenant in the rent deed not to use the premises for any purpose, other  than the one referred to in the rent deed, brought the user by the tenant  within the mischief of Section 10 (2) (ii) (b) of the Act and, therefore, the  order for eviction was justified.  With respect, as we see it, their Lordships  rested their decision on the existence of the negative covenant in the lease  deed and on the view that a breach of that covenant, would attract Section  10 (2) (ii) (b) of the Act, and make the user, one coming within the  mischief of that provision.  In this case, as observed, there is no covenant  as the one involved in Arul Jothi’s case.  In M.K. Palaniappa Chettiar  Vs. A. Pennuswami Pillai [(1970) 2 SCC 290], the tenant, while  continuing the business for which the building was taken on rent, was  using a negligible portion of the building for the purpose of cooking.  This  Court held that the High Court was in error in reversing the decision of  the Rent Controller and the Appellate Authority to the effect that no  ground for eviction under Section 10 (2) (ii) (b) of the Act was made out.    This Court dismissed the petition for eviction.  In Mohan Lal Vs. Jai

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Bhagwan (1988 (3) SCR 345), this Court, interpreting the corresponding  provision in Haryana Urban (Control of Rent & Eviction) Act, 1973, held  that when a tenant who had taken a building on lease for the purpose of  running a business in liquor, converted the business into that of general  merchandise, in the absence of a negative covenant, the user did not  amount to user for a purpose other than  that for which the building was  leased.  The same position was adopted in Gurdial Batra Vs. Raj  Kumar Jain (1989 (3) SCR 423), where the premises was let out for  repairing business and the tenant along with the repairing business, also  carried on sale of television sets for a while.  This Court held that there  was no change of user which would attract the liability for eviction under  the corresponding provision of the East Punjab Urban Rent Restriction  Act, 1949.  It was clearly stated that the concept of injury to the premises  which forms the foundation of Section 108 (o) of the Transfer of Property  Act is the main basis for a provision similar to the one in Section 10 (2)  (ii) (b) of the Act.  We think that the case on hand is governed by the  principles recognized in the latter decisions and the ratio of the decision in  Arul Jothi  has no application in the absence of a negative covenant as  the one obtaining in that case.  Dashrath Baburao Sangale & Others  Vs. Kashimath Bhaskar Data [1994 Supp (1) SCC 504] was a case  where the premises was taken on rent for "sugarcane crushing with the  help of an ox and for the shop thereof" and the tenant was to get  constructed a temporary shed of tin-sheet for that purpose.  The tenant  started a cloth business in the premises.  The courts below found that this  was a user for a purpose other than that for which the premises was leased  and this Court found no ground to interfere.  This decision only re-affirms  the position that everything would depend on the terms of the letting and  the facts of the case.  Obviously, the cloth business started, had no  connection with crushing of sugarcane.  The decision in Ram Gopal Vs.  Jai Narain and others [1995 Supp. (4) SCC 648], shows that the user by  the tenant of a building taken on rent for the purpose of running a shop  (commercial), for a manufacturing purpose, would entail his eviction on  the ground of change of user.  The tenant, in that case, installed an Atta  Chakki and an Oil Kolhu, in the shop.  The case on hand is not one of that  nature.  In other words, in the present case, there was no change of user,  from non-residential to residential or from business to manufacturing or  industrial.  As emphasized already, there was also no negative covenant as  was available in Arul Jothi’s case.  In such a situation, we are satisfied  that the High Court was clearly in error in interfering with the decision of  the Appellate Authority that there was no change of user in the case on  hand attracting Section 10 (2) (ii) (b) of the Act.  Merely because a tenant,  who has taken a building for the purpose of running a trade, alters the  commodity in which he was trading when he took the building on lease or  trades in other commodities also, he could not be held to be using the  premises for a purpose other than the purpose for which it was let.  The  purpose has to be understood, as the purpose of trade and in the absence  of a covenant barring the using of it for any other trade, it will be open to  the tenant to use the premises for expanding his trade or even for taking  up other lines of trade as befits a prudent trader.

8.              It is true that this Court has held in Malpe Vishwanath  Acharya and others Vs. State of Maharashtra and Anr. [(1998) 2 SCC  1], that the Rent Control Legislation is enacted in the larger interest of the  society as a whole and it is not intended to confer any disproportionately  larger benefit on the tenant to the disadvantage of the landlord.  But that  does not mean that the Rent Control Legislation should not be approached  as a beneficial piece of legislation and with the recognition that  reasonable protection to the tenant is one of the objects of that legislation.   While construing a provision of law imposing a liability, for eviction, like  Section 10 (2) (ii) (b) of the Act, one must see whether there has been  such a change of user of the premises as to make it alien to the purpose for  which the building was let and deny eviction when the basic activity  remains the same and there is only a variation in the manner or mode of  carrying on of that activity.  Therefore, the interpretation placed on  Section 10 (2) (ii) (b) of the Act by the High Court in the decision under

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appeal and in some other decisions of that Court referred to in the orders  of the Rent Controller and the High Court, has to be held to be not  warranted or justified.  The order of eviction passed by the High Court  under Section 10 (2) (ii) (b) of the Act has, therefore, to be reversed.   

9.              In support of his claim for eviction under Section 10(2)(iii)  of the Act, what the landlord pleaded was that his tenant had put up new  sign-boards and fixed two additional racks by drilling holes in the wall  and in the beam and had taken an independent electric connection for  which holes have been drilled in the floor and the wall, and all this  amounted to commission of acts of waste as are likely to impair materially  the value and utility of the building.  He also pleaded that the tenant had  damaged the building while converting the shop for selling readymade  dresses.  He had installed additional show-cases on the walls of the  building by making holes therein.   He had increased the consumption of  electricity by fixing up more lights and fans.  He had increased the electric  load, causing constant blowing out of the fuse in the building and causing  damage to the electric service connection to the whole building and the  entire building may catch fire at any moment. He also put up a big name  board outside, damaging the building and had also drawn heavy electrical  lines and taken service connection to the name board, with a heavy load of  electricity.  The tenant admitted the putting up of sign-boards and the  fixing up of racks but he denied that he had caused any damage.   Whatever he had done was with the consent of the landlord and the claim  put forward by the landlord was only an attempt to gain the sympathy of  the Court.  The Engineer, P.W. 2 noted that new racks were fixed by  making holes in floor walls and also in the beams.  Two new massive sign  boards were fixed in the front and side.  Holes were made in the parapet  wall of the first floor and angle irons supporting the sign boards were  fixed.  The parapet wall was only 2" thick and it could not take the weight  of the huge sign boards and the parapet wall may collapse at any time.   New electric connection has been given by making holes in the  foundation and the wall in front and a new meter board had been fixed.   This report of P.W.2 was not sought to be corroborated by any other  material to show that there was any danger because of the taking of a new  electric connection or by the increase in load.  It is true that for the  purpose of his trade, the tenant fixed new racks by making holes in the  floor, the walls and in the beams.  But, in the absence of any other  material, it cannot be said to be the commission of acts of waste as are  likely to impair materially the value and utility of the building.  We must  say that there is hardly any evidence on the side of the landlord to show  that there was material impairment, either in the value or the utility of the  building by the acts of the tenant.  The mere fixing of sign-boards outside  the shop by taking support from the parapet wall, cannot be considered to  be an act of waste which is likely to impair materially the value or utility  of the building.  The report of the Engineer, P.W.2, merely asserts that the  parapet wall will collapse at any time.  There is no supporting evidence in  respect of that assertion.  Ex. B1-letter of the landlord giving permission  to the tenant to fix boards, cannot also be ignored in this context.   Moreover, when a trade is carried on in a premises, that too in an  important locality in a city, it is obvious that the tenant would have to fix  sign-boards outside, to attract customers.  These are days of fierce  competition and unless the premises is made attractive by lighting and  other means, a trader would not be in a position to attract customers or  survive in the trade.  Therefore, the acts of the tenant established, are  merely acts which are consistent with the needs of the tenant who has  taken the premises on rent for the purpose of a trade in leather goods and  shoes and in furtherance of the prospects of that trade.  The fixing of racks  inside the premises even by drilling holes in the walls or beams cannot be  said to be acts which are themselves acts of waste as are likely to impair  materially the value and utility of the building.  Broadly, a structural  alteration however slight, should be involved to attract Section 10 (2) (iii)  of the Act.  In fact, we see hardly any pleading or evidence in this case  which would justify a conclusion that the acts of the tenant amount to  such acts of waste as are likely to impair materially the value and utility of

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the building.  In G. Arunachalam (died) through L.Rs. and anr. Vs.  Thondarperienambi and anr. [AIR 1992 SC 977] dealing with the same  provision, this Court held that the fixing of rolling shutters by the tenant  in place of the wooden plank of the front door by itself did not amount to  a structural alteration that impaired the value of the building and no  eviction could be ordered under Section 10 (2) (iii) of the Act.  Of course,  in that case, there was also a report by an Engineer that the structural  alteration made for fixing the rolling shutter, did not impair the value of  the building.   In the context of the Kerala statute which spoke of  impairment in the value or utility of the building materially and  permanently,  this Court has recently held in G. Raghunathan Vs. K.V.  Varghese [2005 (6) SCALE 675] that the fixing up of rolling shutter and  doing of the allied acts referred to in that decision, would not amount to  user that materially and permanently impairs the value or utility of the  building.  The Act here, only speaks of acts of waste as are likely to  impair materially the value and utility of the building.  The impairment  need not be permanent.  But even then, it appears to us that it must really  be a material impairment in the value or utility of the building.  In British  Motor Car Co. Vs. Madan Lal Saggi (Dead) and anr. [(2005) 1 SCC  8], this Court considered the aspect of material alteration or damage in the  context of Section 13(2)(iii) of the East Punjab Urban Rent Restriction  Act, 1949.  In the lease deed in that case, there was a covenant that the  lessee will not make any addition or alteration or change in the building  during the period of the tenancy.  This Court referred to Om Prakash Vs.  Amar Singh [(1987) 1 SCC 458], Om Pal Vs. Anand Swarup [(1988) 4  SCC 545],  Waryam Singh Vs. Baldev Singh [(2003) 1 SCC 59],  Gurbachan Singh Vs. Shivalak Rubber Industries [(1996) 2 SCC 626],  Vipin Kumar Vs. Roshan Lal Anand [(1993) 2 SCC 614] and held,  ’When a construction is alleged to have materially  impaired the value and utility of the premises, the  construction should be of such a nature as to  substantially diminish the value of the building  either from the commercial and monetary point of  view or from the utilitarian aspect of the building.’

There is hardly any material in the present case on the basis of which the  Court could come to the conclusion that the act of the tenant here has  amounted to commission of such acts of waste as are likely to impair  materially the value and utility of the building.  The Rent Controller and  the High Court have not properly applied their minds to the relevant  aspects in the context of the statute and have acted without jurisdiction in  passing an order of eviction under Section 10 (2) (iii) of the Act.  The  Appellate Authority was justified in denying an order of eviction to the  landlord on this ground.

10.             In these circumstances, we allow this appeal and setting aside  the decision of the High Court restore that of the Appellate Authority.   That would mean that the petition for eviction filed by the landlord would  stand dismissed.  In the circumstances of the case we make no order as to  costs.