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CASE NO.: Appeal (civil)  4392 of 1983

PETITIONER: Spun Casting & Engg. Co.Pvt.Ltd.

RESPONDENT: Dwijendra Lal Sinha (Dead) through Lrs. & Ors

DATE OF JUDGMENT: 08/04/2005

BENCH: ASHOK BHAN & A.K.Mathur

JUDGMENT: J U D G M E N T

BHAN, J.

       This appeal by grant of special leave  has been filed by defendant no.1, the  appellant herein, against the judgment and  decree passed by the High Court of  Calcutta.  By the impugned judgment the  High Court has restored the decree for  recovery of possession and mesne profits  with regard to Plaint ’B’ Schedule property  in favour of the plaintiffs/original  respondent nos.1 & 2 (since deceased and  now represented by their legal  representatives), setting aside the  judgment of the Appellate Court in Title  Appeal No.52/1976 and restoring that of the  Trial Court.

Facts necessary for the disposal of  this appeal are as under: One Hangeswar alias Narendra Nath  Singha on 4th February, 1936 obtained  settlement/lease-hold interest for ’A’  Schedule property, i.e. premises no 77,  Benaras Road, Howrah admeasuring 3 Bighas  including a tank from Sear Sole Raj Estate.  He raised certain constructions including  sheds on ’B’ Schedule property, a part of  ’A’ Schedule property and set up an iron  casting foundry under the name and style of  D.L. Singha and Company, which was run by  him till his death.  After his death on 31st  May, 1954, his legal heirs, original  respondent nos. 1 and 2 settled the whole  karbar (business) of iron casting foundry  along with land and all fittings and  fixtures in favour of one Kalipada Mondal  and Bahar Bala Dassi on 27th July, 1954, for  a period of five years starting with the  month of Baisakha 1361 B.S. Bangabda Samvat  (for short "B.S.") (Bangla year) to Chaitra  1365 B.S.  at a monthly rent of Rs. 466/3  annas. By successive transfers, interest of  original lessees/settlees came to be  acquired by the appellant on 18th January,  1956 (A.D.).   Settlement in favour of the  appellant came to an end by efflux of time

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in Chaitra 1365 B.S., equivalent to, 13th  April, 1959.  Appellant failed to vacate  the ’B’ Schedule property as well as to pay  the rent after 1363 B.S.  

Original plaintiff nos. 1 and 2  instituted suit no. 11/1959 against the  appellant but the same was withdrawn due to  some formal defects with liberty to file a  fresh suit.  After the withdrawal of said  suit, appellant trespassed over ’C’  Schedule property, i.e. remaining ’A’  Schedule property consisting of a tank and  its three banks.  Appellant filled up the  tank, raised certain structures thereon and  extended its work over the said property.  

Plaintiff respondent nos. 1 and 2,  feeling aggrieved by the conduct of the  appellant, instituted the present suit no.  65/1965 for recovery of possession of ’B’  and ’C’ Schedule properties and for mesne  profits.  Appellant in the written  statement, interalia denied the title of  the plaintiffs to the suit property as well  as existence of relationship of landlord  and tenant between them.  The allegation  that the appellant had trespassed over ’C’  Schedule property was denied.

Subordinate Court decreed the suit with  respect to both ’B’ and ’C’ Schedule  properties.  It was held that ’C’ Schedule  property was not let out to the appellant  and the appellant had taken possession of  the same by committing trespass. That  relationship of landlord and tenant existed  between the parties with regard to ’B’  Schedule property. It was held that the  predecessors-in-interest of the appellant  became tenant of the premises by virtue of  settlement of karkhana (factory) together  with the land underneath in their favour.   Appellant having stepped into their shoes  is estopped under Section 116 of the Indian  Evidence Act from disputing the title of  the plaintiffs.  The settlement came to an  end by efflux of time on 13th April, 1959.   There was no necessity to determine the  tenancy by issuing a notice under Section  106 of the Transfer of Property Act.   Service of notice under Section 13 (6) of  the West Bengal Premises Tenancy Act, 1956  (for short "the Act") was sufficient to put  an end to the relationship of landlord and  tenant between the parties.  It was also  held that the appellant had committed  default in payment of rent of ’B’ Schedule  property.  

Appellant being aggrieved preferred  Title Appeal no. 52/1976 challenging the  judgment and decree passed by the  Subordinate Court in favour of the  plaintiff-respondents.  Appellate Court

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partly allowed the appeal, affirming the  decision of the Subordinate Court that ’C’  Schedule property was not covered by the  settlement dated 27th July, 1954 and was  trespassed upon by the appellant.   Appellant had raised construction on ’C’  Schedule property illegally without taking  permission from the landlord.  With respect  to ’B’ Schedule property the judgment and  decree passed by the Trial Court was set  aside.  It was held that since the Trial  Court had found tenancy to be a premises  tenancy, it must be governed by the  provisions of the West Bengal Premises  Tenancy Act, 1956 and, therefore, neither  expiry of the period of settlement nor the  assignment of the interest created  thereunder in favour of the appellant can  be a ground for eviction of the appellant.   That tenancy of ’B’ Schedule property could  not be determined without issuing notice  under Section 106 of the Transfer of  Property Act.  That the settlement dated  27th July, 1954 was made by the respondents  in their character as a partnership firm  and therefore suit for eviction filed by  them in their individual capacity was not  maintainable.  

Feeling aggrieved by the findings of  the Appellate Court with respect to the  trespasser over ’C’ Schedule property,  appellant preferred Second Appeal no.  646/1977 and being aggrieved by the setting  aside of the decree with respect to ’B’  Schedule property, plaintiff-respondents  filed cross objections in the High Court.    High Court heard the second appeal and  cross objections together and disposed them  of by passing a common judgment.   

Appeal filed by the appellant with  regard to ’C’ Schedule property was  dismissed. It was held that the evidence on  record established as found concurrently by  the courts below that the occupation of the  appellant on the said property was illegal  and by way of trespass. Cross objections  filed by the plaintiff-respondents were  allowed granting decree for recovery of  possession of ’B’ Schedule property.    Contention raised by the counsel for the  respondents that the settlement dated 27th  July, 1954 entered into between Narendra  Nath Singha and predecessors-in-interest of  the appellant was not the tenancy of  "premises" as had been held by the courts  below but was the tenancy of the karbar  (business) of iron casting foundry along  with the machineries and sheds and  structures wherein the foundry was set up  was accepted.  High Court after construing  the provisions of the settlement dated 27th  July, 1954 and relying upon the three  decisions of this court in Uttamchand vs.

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S.M. Lalwani (AIR 1965 SC 716), Dwarka  Prasad vs. Dwarka Das Saraf (AIR 1975 SC  1758) and Natraj Studios (P) Ltd. vs.  Navrang Studios (AIR 1981 SC 537) observed  that the dominant intention of the parties  while creating the lease was to lease the  karbar (business) of iron casting foundry  and not that of the premises within the  meaning of Section 2 (f) of the West Bengal  Premises Tenancy Act, 1956.  Structures and  sheds formed part of the settlement only  because the foundry was set up therein.   That the parties never intended to settle  or grant lease of the structures and sheds  as such and therefore, it could hardly be  said to be a settlement in respect of the  premises constituting a tenancy of the  premises within the meaning of West Bengal  Premises Tenancy Act, 1956.  Finding of the   First Appellate Court with regard to the  requirement of issuance of notice under  Section 106 of the Transfer of Property Act  was set aside.  It was further held that  after the dissolution of the partnership  firm the respondents could file the suit in  their individual capacity.  

Finding recorded by the courts below  and affirmed by the High Court that the ’C’  Schedule property had not been let out to  the appellant and that the appellant had  trespassed upon the same is a finding of  fact based on evidence and, therefore, does  not call for interference.

Finding recorded by the High Court with  regard to the requirement of issuance of  notice under Section 106 of the Transfer of  Property Act and the maintainability of the  suit by the respondents in their individual  capacity after the dissolution of the  partnership firm has not been challenged  before us.  These two findings are also  affirmed.   

With regard to ’B’ Schedule property  the High Court set aside the finding of the  First Appellate Court on two counts.   Firstly, that the appellant had committed a  default in payment of the rent after 1363  B.S. and secondly, on the ground that what  was let out to the appellant was not the  premises within the meaning of Section 2  (f) of the Act but the business housed in a  building along with machinery which was not  covered under the provision of the Act.     

Learned counsel for the appellant is  right in submitting that the High Court has  erred in holding that the appellant had  committed a default in payment of the rent.   Plaintiff-respondents in their plaint did  not take the plea that the appellant had  committed a default in the payment of the  rent or seek his eviction on the ground of

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failure to pay the rent.  No issue had been  framed on this point.  There is no material  on the record to show that the appellant  did not deposit the alleged arrears of rent  as required by Section 17 (i) of the West  Bengal Premises Tenancy Act, 1956, and as  such a decree on the ground of default in  payment of rent could not be passed.  In  the absence of any pleadings and evidence  on record that the appellant had committed  a default in the payment of rent, the High  Court has erred in passing a decree for  eviction on that ground.   

This Court in Uttam Chand v. S.M.  Lalwani, AIR 1965 SC 716 drawing a  distinction between the lease of a building  and the lease of a business held that what  was protected under the Act was the lease  of the building and not the lease of the  business. The question before the Court was  as to whether the lease created of Dal Mill  building with fixed machinery in sound  working condition was an ’accommodation’  within the meaning of Section 3A of the  Madhya Pradesh Accommodation Control Act,  1955.   For determining the nature of lease  created the Court laid the test of  ’dominant intention’ of the parties while  creating the lease which is to be gathered  in each case by construing the terms of the  lease deed.  Construing the terms of the  lease in the said case this Court came to  the conclusion that the dominant intention  of the parties was to create the lease of  the business and not that of the building.   It was held that since the lease created  was of running the business, the same was  not protected under the Act.  It was  observed in para 12 as under:- "12. What then was the dominant  intention of the parties when  they entered into the present  transaction?  We have already  set out the material terms of  the lease and it seems to us  plain that the dominant  intention of the appellant in  accepting the lease from the  respondent was to use the  building as a Dal Mill.  It is  true that the document purports  to be a lease in respect of the  Dal Mill building; but the said  description is not decisive of  the matter because even if the  intention of the parties was to  let out the Mill to the  appellant, the building would  still have to be described as  the Dal Mill building.  It is  not a case where the subject  matter of the lease is the  building and along with the  leased building incidentally

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passes the fixtures of the  machinery in regard to the Mill;  in truth, it is the Mill which  is the subject matter of the  lease, and it was because the  Mill was intended to be let out  that the building had inevitably  to be let out along with the  Mill. "

       It was further observed in the same  paragraph:-   "The fixtures described in the  schedule to the lease are in no  sense intended for the more  beneficial enjoyment of the  building.  The fixtures are the  primary object which the lease  was intended to cover and the  building in which the fixtures  are located comes in  incidentally.  That is why we  think the High Court was right  in coming to the conclusion that  the rent which the appellant had  agreed to pay to the respondent  under the document in question  cannot be said to be rent  payable for any accommodation to  which the Act applies."  

       Following the aforesaid judgment in  Dwarka Prasad vs. Dwarka Das Saraf, AIR  1975 SC 1758 this Court held that where a  cinema theatre equipped with projector and  other fittings is let out it would not be a  lease of ’accommodation’ as defined in  Section 2 (1) (d) of the U.P. (Temporary)  Control of Rent and Eviction Act, 1947.  It  was observed that, legislature intended to  cover within the meaning of word  ’accommodation,’ premises simpliciter  either for residential, commercial or  industrial purposes but did not include the  business accommodated in a building.  Where  the business itself was let out, the same  would not fall within the meaning of the  word ’accommodation’ enjoying the  protection of the Rent Act.  That the  leasing of a lucrative cinema business  could not be reduced to a mere tenancy of  building covered within the scope of the  definition of ’accommodation’.

In the present case according to the  plaintiff-respondents what was settled was  the business of iron casting foundry along  with building and the machinery therein and  not the premises within the meaning of West  Bengal Premises Tenancy Act, 1956.  In  order to determine the true character of  the settlement, it would be necessary to

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refer to the deed itself and construe the  terms thereof.   

The deed has not been described as a  lease but as "an agreement for five years."   In the first paragraph of the deed, the  settlers recite how the first party having  taken settlement of the land at premises  no.77, Benaras Road along with a tank had  set up an iron casting foundry valued  approximately at Rs.75,000/-.  It then goes  on to recite that it is the said karkhana  or in other words the business which is  being settled with the second party i.e.  the appellants on terms and conditions set  out therein.  Clause (i) of the terms  provides that the second party is taking  settlement of the business along with all  its fixtures and appliances and the  interest of the settlers in the land on an  annual rent of Rs.5,594.4 annas payable on  a monthly instalment of Rs.466.3 annas.   The relevant portion of Clause (i) reads: "The Second party is taking the  said karbar (business) together  with all rights on the aforesaid  land and all fittings and  fixtures of the Iron Foundry  styled D.L. Singha & Co. from  the first party with the promise  to pay a sum of Rs.5594-4 as  five thousand five hundred  ninety four and four annas per  annum on account of rent."

Under Clause (ii) the settlers  undertake to pay the rent to the landlord  as also to the municipality.  Clause (iii)  provides for forfeiture of the settlement  for non-payment of rent for four  consecutive months.  Clause (iv) provides  that on the expiry of the agreement the  "fittings and fixtures of the said karbar  (business) which the second party is now  receiving from the first party (the second  party) shall return the same on the expiry  of the period of agreement.  If there be  any loss or damage to the same the same  shall be made good by the second party."   Clause (v) provides that if necessary,  second party can bring in new fixtures and  appliances with prior notice to the  settlers and on the expiry of the agreement  the second party shall be entitled to  remove the fixtures and appliances brought  by them.  Clause (vi) provides that  settlers will be entitled to carry on the  business in their own firm’s name but they  shall have to bear all the expenses for  electricity and telephone.  Clause (vii)  provides that after the expiry of first  term if the second party desires to carry  on the said karkhana (business) the first  party shall enter into a separate agreement  for a stipulated period.  Clause (ix)

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expressly excludes the tank and its three  banks from the settlement so made.  

The High Court after referring to the  above quoted terms of the settlement came  to the conclusion that the dominant  intention of the parties who entered into  the settlement was to effect a settlement  in respect of the business of iron casting  factory.  The structures and sheds formed a  part of the settlement only because the  foundry was set up therein.  The parties  had never intended to settle or grant lease  of the structure and the sheds as such.   The High Court concluded that what was let  out to the appellant was the business of  running a iron casting foundry along with  the building and the machinery and not a  premises constituting a ’premises tenancy’  within the meaning of Section 2 (f) of the  West Bengal Premises Tenancy Act, 1956.

We have no hesitation in accepting the  findings recorded by the High Court.   Premises have been defined under Section  2(f) of the Act to mean:-

"Section 2 (f) : "premises"  means any building or part of a  building or any hut or part of a  hut let separately and includes- (i)     the gardens, grounds, and  out-houses, if any,  appertaining thereto, (ii)    any furniture supplied or  any fittings or fixtures  affixes for the use of the  tenant in such building or  part of a building or hut  or part of a hut; but does  not include a room in  hotel or a lodging house."

Reading the terms of the settlement as  aforesaid and construing the same we are of  the view that the dominant  intention  of   the  settlers was to effect the  

settlement in respect of the karbar  (business) of iron casting foundry set up  by them along with machinery housed in a  building.  ’Premises’ in the Act are  defined to mean a building or a part of a  building which includes gardens, grounds  and out-houses, if any, appertaining to the  building.  It also include the furniture  supplied or any fittings or fixtures in a  building or a part of the building but  would not include a room in a hotel or a  lodging house. It does not include the  lease of a business along with machinery in  a building.  The intention of the parties  was not to settle or grant lease of the

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structures and sheds as such.  Structures  and sheds did not constitute the dominant  part of the settlement in favour of the  appellant.  It is evident from the terms of  the settlement that the dominant intention  of the parties was to create a lease for  running the business of an iron casting  foundry.  It cannot be said that the  settlement was in respect of the premises  constituting ’premises tenancy’ within the  meaning of the Act.  Tenancy was not being  created of the premises to run a business  it was to the contrary.

       In Natraj Studios (P) Ltd. v. Navrang  Studios and another, AIR 1981 SC 537 though  this Court took the same view but keeping  in view the peculiar provisions of the  Bombay Rents, Hotel and Lodging House Rates  Control Act, 1947, it was held the  principle laid down in the earlier two  judgements would not be applicable to the  case.  Referring to the amended provisions  of the said Act it was held that the  tenancy created was of the premises within  the meaning of Section 5 (8) and 5 (8A) to  which Part 11 of the Act has been made  applicable by Section 6 (1) notwithstanding  the fact that the building was not let out  as such.  We do not agree with the learned  counsel for the appellant that this Court  in Natraj Studios (P) Ltd. (supra) had  revised its earlier view.  The provisions  of West Bengal Premises Tenancy Act, 1956  are altogether different from the  provisions of the Bombay Rents, Hotel and  Lodging House Rates Control Act, 1947.  The  West Bengal Premises Tenancy Act, 1956 can  have application only if what is settled by  way of lease is a premises and in order to  decide whether the settlement is such or  not, we are governed by the well settled  principle laid down by three-Judge Bench of  this Court in Uttamchand vs. S.M. Lalwani,  AIR 1965 SC 716 followed by a later Bench  of four hon’ble Judges in Dwarka Prasad vs.  Dwarka Das Saraf, AIR 1975 SC 1758.  In our  view, what was settled in the present case  was not the premises for carrying on a  particular business but the businesses  itself and therefore, it cannot come within  the purview of West Bengal Premises Tenancy  Act, 1956

No other view was urged before us.  For  the reasons stated above we do not find any  infirmity in the judgment and decree passed  by the High Court and the same is affirmed.   Accordingly, the appeal is dismissed with  no orders as to costs.