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PETITIONER: B.G.KUMARAVELU & ANR.

       Vs.

RESPONDENT: K.R.KANAKARATHNAM CHETTY & ORS.

DATE OF JUDGMENT:       03/01/1996

BENCH: BHARUCHA S.P. (J) BENCH: BHARUCHA S.P. (J) AHMAD SAGHIR S. (J)

CITATION:  1996 AIR  960            1996 SCC  (1) 683  JT 1996 (1)     1        1996 SCALE  (1)57

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T S.C. AGRAWAL, J :      Special Leave granted.      The question  that  falls  for  consideration  in  this appeal arising  out of a suit for eviction of the appellant- tenants is  whether a  lease of a building with fittings and furniture for  running a  cinema theater  falls  within  the purview of the Karnataka Rent Control Act, 1961 (hereinafter referred to  as ‘the  Act’) and  the tenant  is entitled  to avail  the   protection  against  eviction  available  under section 21 of the Act.      A Cinema  Theater known as "Opera House" bearing No. 24 (Old)  (New   No.57)  101,   Brigade  Road,  Civil  Station, Bangalore belonged  to Mr.T.C.W.Skipp.  After the  death  of Mr.Skipp on  November 10, 1934, Mrs.Evelyn Elizebeth Holland Smith (Nee Skipp), one of his heirs, obtained the letters of administration in  respect of  the properties  of  Mr.Skipp, including the  ‘Opera House’,  and she  leased out  the said property to  one R.Phul  Chand. Mrs.Evelyn Elizebeth Holland Smith (Nee  Skipp) along  with other  heirs of Mr.Skipp sold the said  property including  furnitures, fixtures, fittings and machinery  free of  all encumbrances,  except the  lease hold rights  of R.Phul  Chand, to Shri C.S.Krishnaiah Chetty and his  wife, Smt.Rangamma under a sale deed dated July 20, 1939. Shri  C.S.Krishnaiah Chetty  had 3/8th  share  in  the property while  Smt.Rangamma had  5/8th share  in  the  said property.  By   lease  deed   dated   September   29,   1944 C.S.Krishnaiah  Chetty   and  Smt.Rangamma  leased  out  the premises  of   the   ‘Opera   House’   including   fittings, furnitures,   machineries    etc.   to    Sri   Rao    Sahib S.V.Govindrajan, the  father of the appellants herein. Under the said  lease deed the rent was Rs.800/- per month and the hire for  furnitures etc.  was Rs.300/-.  The said lease was for a  period of  69 months and it expired on June 29, 1950. Thereafter Sri  Govindrajan became a tenant holding over and

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the landlords  were receiving  the rents from him. After the death of  Sri  Govindrajan  in  1955,  there  was  a  family partition vide  deed dated  July 15,  1957 and the leasehold interest in the suit property was allotted to the appellants and the  appellants were  treated as tenants holding over by the landlords.  Smt.Rangamma died  on August  17,  1958  and after her death Sri C.S.Krishanaiah Chetty, as sole executor (as per her last will), sold her 5/8th share in the property to his  son-in-law Shri K.R.Kanakarathnam Chetty, respondent no.1 herein,  by sale  deed dated  November 16, 1959. On the same day Shri C.S.Krishnaiah Chetty sold his own 3/8th share in the  said  property  to  his  daughter,  Smt.K.Yasodamma, respondent no.2 herein. On the same day there was attornment of tenancy by the appellants in favour of respondents no.1 & 2. On November 30, 1959 the appellants executed a lease deed in favour  of the  respondents no.1  & 2  in respect  of the building as  well as  furniture an fittings and all articles including machinery  etc. The said lease was for a period of two  years.  The  appellants  continued  to  be  tenants  by executing from  time to  time lease  deeds in  favour of the respondents nos.1  & 2. Lease deed dated January 6, 1962 was executed for  a period  of 55  months from December 1, 1961. Under the said lease the rent was Rs.950/- per month and the hire of furniture and machinery etc. was Rs.550/- per month. This lease  was followed by lease deed dated August 11, 1966 for a  further period  of 55 months from July 1, 1966. Under this lease deed the rent was Rs.1300/- per month and hire of furniture and  machinery etc.  was Rs.700/- per month. After the expiry  of the  said lease,  the appellants executed two separate lease  deeds dated  January 28, 1971, one in favour of respondent  no.1 and  the other  in favour  of respondent no.2. Both  the lease  deeds were  for a period of 55 months from February  1, 1971.  Under the  lease deed  executed  in favour of respondent no.1 the monthly rent was Rs.937.50 and the hire  of furniture  and machinery etc. was Rs.468.75 per month. Under the lease deed executed in favour of respondent no.2  the   said  amounts   were  Rs.562.50   and  Rs.281.25 respectively. On  October 1,  1975 the appellants executed a lease deed  in favour  of respondent  no.1 in respect of his 5/8th share in the suit property whereunder the monthly rent was Rs.1750/-  and a  lease deed  was executed  in favour of respondent no.2  on September  27, 1975  in respect  of  his 3/8th share whereunder the monthly rent was Rs.1,000/-. Both these leases were in respect of the theater with machineries and fixtures.  As regards  the  furniture  it  appears  that respondent no.2  had  made  a  gift  of  her  share  of  the furniture to  her son  Ramakrishnan, respondent no.3 herein, and respondent  no.1  had  made  a  gift  of  his  share  of furniture to  his daughters,  Smt.Uma Devi,  respondent no.4 herein, and Smt.Rajeshwari Gupta, respondent no.5 herein, in equal shares.  On October  10,  1975  three  separate  lease agreements were  executed by  the appellants  in  favour  of respondents nos.  3, 4  and 5.  Under  the  lease  agreement executed in favour of respondent no.3, the rent was Rs.200/- per month  whereas under  the lease  agreements executed  in favour of  respondents nos.4 & 5 the monthly rent payable to each of  them was Rs.150/-. All the leases were for a period expiring on August 31, 1978. By an agreement dated September 9, 1978  the leases  were extended  for a  period  of  three months till November 30, 1978. On failure on the part of the appellants to  handover the  possession on the expiry of the leases on  November 30,  1978, the  respondents nos.1  to  5 filed the  suit giving  rise to  this appeal in the Court of Addl.City Civil Judge, Bangalore city.      The suit  was originally  filed on the basis that under

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Section 31  of the  Act, the  provisions contained in part V (including Section  21) of  the Act were not applicable to a non-residential building, the monthly rent of which exceeded Rs.500/- or  the  annual  rental  value  of  which  exceeded Rs.6,000/-. It  was claimed  that the rent in respect of the suit premises exceeded Rs.500/- per month and the provisions of the  Act did  not apply to the leases in question. During the pendency  of the  suit, Section 31 of the Act was struck down by  the Karnataka  High Court  in H.Padmanabha  Rao  v. State of  Karnataka, ILR  1986 Kar.  2480.  After  the  said decision, the  appellants amended their written statement on June 25,  1988 raising  the plea  that the provisions of the Act covered  the lease  in question  and the  suit  was  not maintainable and that the Civil Court had no jurisdiction to entertain the  suit. In  view of  the said  amendment in the written  statement,   the  plaintiff   -  respondents   were permitted to  file a  reply by  way  of  rejoinder.  In  the rejoinder, the  plaintiff-respondents pleaded that the lease was of a well equipped permanent cinema theater with all the equipments, namely,  machineries,  fixtures,  furniture  and fittings etc.  and was  not a  * mere  ordinary tenancy of a building, and, therefore, the provisions of the Act were not attracted. In  the light  of the  said plea,  the  following additional issue was framed by the Trial Court :      "Is the suit not maintainable in view of      section 31  of the K.R.C. Act was struck      down and  this court has no jurisdiction      to try the suit?"      The IV  Addl. City  Civil Judge,  by his judgment dated January  7,   1989,  decreed   the  suit  and  directed  the appellants to  deliver vacant  possession of the Opera House building, furniture,  fittings, machinery fittings, fixtures etc. It was, however, found that the projectors, amplifiers, screen and  speakers were not the property of the plaintiffs as claimed  by them and dismissed the suit of the plaintiff- respondents in  respect of  the said  properties. The  trial court has  held that  though the plaintiffs have not alleged in the  plaint, that  it was  a composite lease of a running cinema  theater  but  from  a  reading  of  the  plaint,  in entirety, it  is clear  that the  plaintiffs have leased out the cinema theater as a running concern. The trial court has held that  Phulchand had  taken the  premises to run it as a cinema theater  and thereafter  the father of the appellants and, after  his death,  the appellants  have continued to be the lessees  of the  cinema theater  as  such  but  not  the building or  the furniture  and that a fully equipped cinema theater was leased in favour of the appellants and that they also had taken the cinema theater as a running concern, and, therefore, the  suit was maintainable even though section 31 of the Act had been struck down.      The High  Court,  on  appeal,  has  affirmed  the  said judgment of  the IV  Addl. City  Civil Judge. The High Court has upheld  the finding recorded by the trial court that the lease did not include the projectors, amplifiers, screen and speakers. The  High Court,  however, held  that the dominant purpose of  the lease  was to  run a  cinema business in the building  with   the  furniture,   machinery  and  equipment provided therein  and that  in fact the lease is a composite lease of  the building with furniture, fittings, machineries and equipments  for running  a cinema  theater and the lease was outside  the purview  of the  Act and  the same does not come under  the provisions of the Act. In coming to the said conclusion, the  High  Court  has  placed  reliance  on  the decisions of  this court  in Uttamchand  v. S.M.Lalwani, AIR 1965 S.C.  716, and  Dwarka Prasad v. Dwarka Das Saraf, 1976

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(1) S.C.R.  277. The  decision of  the Madhya  Pradesh  High Court in  Anant Gadre  v. Smt. Gomtibai, AIR 1983 M.P.72 was held to be inapplicable in the facts of this case.      Before we  proceed to  deal with the submissions of the learned counsel,  it would  be necessary  to  refer  to  the definition of  the expression  "premises" and  "building" as contained in  the Act.  The "premises" is defined in section 3(n) of the Act in the following terms : "(n) "Premises" means - (i) a building as defined in clause (a); (ii) any land not used for agricultural purposes;"      The expression "building" is defined in Section 3(a) of the Act as follows:      "(a) "building"  means any  building  or      hut or  part of  a building or hut other      than a  farm house,  let or  to  be  let      separately  for   residential  or   non-      residential purposes and includes -      (i)  the garden, grounds and out houses,      if any appurtenant to such building, hut      or part  of such building or hut and let      or to be let along with such building or      hut or part of building or hut;      (ii) any  furniture   supplied  by   the      landlord for the use in such building or      hut or part of a building or hut;      (iii)     any fittings  affixed to  such      building or  part of  a building for the      more beneficial  enjoyment thereof,  but      does  not   include  a   room  or  other      accommodation in  a hotel  or a  lodging      houses".      The definition of "building" in Section 3(a) of the Act is   similar   to   the   definition   of   the   expression "accommodation" in  Section 3(a)  (y) of  the Madhya Pradesh Accommodation Control  Act, 1955  and Section  2(a)  of  the U.P.(Temporary) Control of Rent and Eviction Act, 1947.      In Uttamchand  v. S.M.Lalwani  (supra) this  Court  has dealt with  the question  whether the  lease in respect of a Dal Mill building with fixed machinery could be said to be a lease of  ‘accommodation’ within the meaning of Section 3(a) (y) of the M.P.Accommodation Control Act, 1955. It was urged that the  lease was  of the  Dal Mill  building and that the machinery came  under the  lease was  incidentally as having been fixed  in the  said building. It was submitted that the court must  apply the  test of the dominant intention of the parties. Construing  the lease  deed by applying the test of the dominant  intention of  the parties, the Court held that though the  document purported  to be  a lease in respect of the Dal  Mill building the said description was not decisive of the  matter and  that it was not a case where the subject matter of  the lease  was the  building and  along with  the leased building  incidentally  passes  the  fixture  of  the machinery in regard to the Mill and that in truth it was the Mill which  was 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. In that  context, this  Court has  held that the fixtures in the schedule  to the  lease are in no sense intended for the more beneficial  enjoyment of  the  building  and  that  the fixtures  are  the  primary  objects  which  the  lease  was intended to cover and the building in which the fixtures are located comes  in incidentally. It was, therefore, held that it was  a case  where the  tenant had entered into the lease for the purpose of running of the Dal Mill which was located

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in the  building and  that a Mill of this kind would have to be located  in some  building or  another, and  so, the mere fact that  the lease  purported to  be  in  respect  of  the building would  not  make  it  a  lease  in  respect  of  an accommodation  as  defined  in  Section  3(a)(y)(3)  of  the M.P.Accommodation Control Act, 1955.      In Dwarka  Prasad v.  Dwarka  Das  Saraf  (supra),  the question which  came up  for consideration before this Court was whether  a cinema  theater equipped  with projectors and other fittings  and ready to be launched as an entertainment house was  an accommodation as defined in section 2(1)(a) of the U.P.  (Temporary) Control  of Rents  and  Eviction  Act, 1947. As indicated by the Court, the core of the controversy was whether  the lease was of the building, the fittings and the fixtures  merely making  for the beneficial enjoyment of and ancillary  to the  building, as  urged by the tenant, or whether the  building provided  a bare, though appropriately designed, enclosure  to have  an  enterprise,  the  dominant purpose or  real subject  of the  lease  being  the  cinema, apparatus   and   fittings,   including   subsidiarily   and incidentally, though necessarily, the structure of brick and mortar. The  Court held that the lease of an "accommodation" must essentially  be of  a building  -  not  a  business  or industry together with the building in which it is situated. Referring to  the amenities  which may  be provided  in  the building by  landlord to  see that the tenants’ enjoyment of the tenement  may be  more attractive,  viz., furniture  and fittings, it  was observed  that the  crucial point  is that these additions  are appurtenant, subservient and beneficial to the  buildings itself and they make the occupation of the building more  convenient and  pleasant  but  the  principal thing  demised   is  the  building  and  the  additives  are auxiliary and  that whether the lease is composite and has a plurality of  purposes, the  decisive test  is the  dominant purpose of  the demise.  In  that  case  the  rent  for  the building was  Rs.400/-  per  month  and  the  rent  for  the projector and  all other  items fixed  in the  building  was Rs.1,000/- per  month and  the commencement of the lease was to synchronize  with the  inaugural cinema show on March 25, 1953. In the light of these facts it has been held:      "In  the   present  case   we  have   to      visualize  what   was  the  dominant  or      decisive component  of  the  transaction      between the  parties, the tenancy of the      building qua building or the taking over      of a  cinema house  as a  business,  the      projectors,  furniture,   fittings   and      annexes being  the  moving  factor,  the      building  itself  playing  a  secondary,      though   necessary,    role    in    the      calculations of  the parties.  Going  by      the rental  apportioned, it  is  obvious      that the  parties  stressed  the  cinema      equipment as  by far the more important.      Judging  by  the  fact  that  there  had      already been  a cinema in this house for      several  years,   with   the   necessary      certificates under  the various statutes      for running a cinema theater obtained by      the landlord  and that  the lease itself      was to  commence only  from the  date of      the first  show  of  the  films,  doubts      regarding  the   essential  object   and      subject of the bargain stand dispelled."      [pp. 283-84]

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    "In the  case before us the fixtures are      not for the more beneficial enjoyment of      the  building.   On  the  contrary,  the      possession of  the building is made over      as an  integral part  of, and incidental      to,  the   making  over  of  the  cinema      apparatus and  costly appliances. In the      language of the learned Chief Justice in      Uttam Chand  case (supra), 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."      [p. 287]      "A lease  of a  lucrative  theater  with      expensive cinema equipment, which latter      pressed  the   lessee  to  go  into  the      transaction,   cannot    reasonably   be      reduced  into   a  mere   tenancy  of  a      building together  with  fittings  which      but make the user more comfortable."      [pp. 289-90]      Shri P.P.Rao,  the learned senior counsel appearing for the appellants,  has urged  that adopting  the dominant test laid down by this Court in Uttamchand v. S.M.Lalwani (supra) and Dwarka  Prasad v.  Dwarka Das Saraf (supra) the lease in the present  case is  primarily a lease for the building and the fittings  and furnitures  etc.  are  incidental  to  the building which was meant to be used as a cinema theater and, therefore, the  lease is  for a  ‘building’  as  defined  in Section 2(a)  of the  Act. In  this regard Shri Rao has laid emphasis on the fact that projectors, amplifiers, screen and speakers were  not part of the equipment that was leased out and that  the said  equipment has  to  be  provided  by  the appellants and,  therefore, that  it  was  not  a  lease  in respect of the business of a cinema theater or for running a cinema theater.  The submission  is that furniture, fittings and other  equipment which  was leased  out along  with  the building was  for the  beneficial enjoyment  of the building which had  been constructed  for  being  used  as  a  cinema theater and  the said furniture, fittings and equipment were incidental and  not the  dominant purpose  of the  lease and that the  dominant purpose  of the  lease was  the  building which was  to be used as a cinema theater. Shri Rao has also submitted that  in the  present case the furniture was owned by the  respondents nos.3,  4  and  5  while  the  building, fittings and the equipment were owned by respondents nos.1 & 2. Moreover,  Shri Rao has pointed out that as per the terms of  the   lease  the   rent  for  the  building  payable  to respondents nos.1  & 2 was Rs.2,750/- per month and rent for the furniture  that was payable to respondents nos.4 & 5 was Rs.500/- per  month which  was later  on raised to Rs.1000/- per month.  Shri Rao  has placed reliance on the judgment of the  High   Court  of  Madhya  Pradesh  in  Anant  Gadre  v. Smt.Gomtibai  (supra)  where  the  lease  was  of  a  cinema building with  the furniture,  fans and  other fittings  but without projector  or the  machinery for exhibition of films and it was held that the dominant intention was to lease out the building  with furniture and fittings and not to let out the cinema business. Shri Rao has urged that in the impugned judgment the  High Court  was in  error in  holding that the said case was not applicable in the facts of this case.      Shri  Harish   N.Salve,  the   learned  senior  counsel appearing for  the plaintiff-respondents, has submitted that the purpose  of the  lease was  to run  a cinema  which  was

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already running  in the  premises and  in this regard he has invited our  attention to  the  earlier  leases  granted  in favour  of   Phulchand  and   Govindrajan  as  well  as  the appellants. The  submission of  Shri Salve is that the lease for furniture  was not  an independent  transaction and that the High  Court has rightly held that the dominant intention was to  grant the  lease for  running a cinema theater. Shri Salve’s  contention   is  that   the  mere  fact  that  some equipments were not leased out would not alter the nature of the lease.      Though there  are  separate  lease  deeds  executed  by respondents Nos.1  and 2  in  respect  of  their  respective shares in  the premises  and separate  lease deeds have been executed by  respondents nos.3  to 5  for the  furniture but having regard  to the leases executed earlier, we will treat all of  them as  part of  a single  lease for  the building, fittings and equipment and furniture.      In view of the decisions of this Court in Uttamchand v. S.M.Lalwani (supra)  and Dwarka  Prasad v.  Dwarka Das Saraf (supra) for  the purpose of determining whether the lease in the present case is in respect of a ‘building’ under Section 3(a) of the Act so as to fall within the ambit of expression "premises" as defined in section 3(n) of the Act, we have to apply the  test of the dominant intention of the parties. It is, therefore,  necessary to  find out  what is the dominant purpose of  the demise. The property covered by the lease is the  cinema   building,  fittings  and  furniture  and  some equipment. The  projectors, amplifiers,  screen and speakers are, however, not included in the demise. In the lease deeds that were executed from time to time since 1944 the rent for the building  and fittings  and the  hire for  furniture and machinery etc.  has been  apportioned and  that rent for the building is  much more  than to  the hire  for furniture and machinery  etc.,  the  ratio  being  2:1  approximately.  It cannot, therefore,  be said  that cinema  equipment is  more important part  of the  demise  than  the  building.  Having regard to the apportionment of the rent for the building and the furniture  and  equipments  it  can  be  said  that  the dominant purpose  of the demise is the building qua building and the  fittings and other equipment only incidentally pass with the  building which has been constructed for being used as a cinema theater. This is not a case where it can be said that the  fittings and the equipment are the primary objects which the  lease was  intended to  cover and the building in which they  are located  comes  in  incidentally.  It  must, therefore, be  held  that  the  dominant  intention  of  the parties was  to let  out the  building for  being used  as a cinema theater  and it  cannot be  said  that  the  dominant intention was  to  let  out  the  fittings,  furnitures  and equipment and  the building  playing a subsidiary role only. Moreover, in  the absence  of  the  projectors,  amplifiers, screen and  the speakers,  which are  the major  part of the equipment required for exhibition of films it cannot be said that the  lease was  of a  running cinema  business or  of a fully equipped  running cinema  theater. On that view of the matter there is no escape from the conclusion that the lease in favour of the appellants is of a ‘building’ as defined in Section 3(a) of the Act and it falls within the ambit of the expression "premises" as defined in Section 3(n) of the Act. This would  mean that  the appellants  are entitled  to  the protection of  the provisions  of the  Act in  the matter of eviction and they can be evicted only in accordance with the provisions of  the Act  in proceedings  initiated before the appropriate forums.      Since  we  are  of  the  opinion  that  the  lease  was

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primarily of  a ‘building’ falling under section 3(a) of the Act and the appellants are entitled to the protection of the Act in the matter of eviction, it must be held that the suit filed by  the plaintiff-respondents  for the eviction of the appellants in  the Civil  Court was  not  maintainable.  The appeal is,  therefore, allowed,  the judgment  and decree of the High  Court dated  22nd April,  1994  in  Regular  First Appeal No.80  of 1989  as well as the judgment and decree of the IV  Addl. City Civil Judge, Bangalore city dated January 7, 1989  in Original  Suit No.409  of 1980 are set aside and the said  suit filed  by the  plaintiff-respondents for  the eviction of  the appellants  is dismissed. There is no order as to costs.