Reportable

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.  6142-6143    OF 2009 (Arising out of SLP(C) Nos. 1591-1592/2008)

M/s. Commercial Auto Sales (P) Ltd.         …Appellant

Versus   M/s. Auto Sales (Properties)     …Respondent

JUDGEMENT

R.M. Lodha, J.

Leave granted.

2. These  two appeals  by  special  leave  are  directed  

against  the  judgment  and  order  dated  December  10,  2007  

passed by the High Court of Judicature at Allahabad whereby it  

dismissed revision petition of  the  present  appellant  preferred  

under Section 25 of the Provincial Small  Causes Courts Act,  

1887 and affirmed the judgment and decree for eviction dated  

February 5, 2003.

3. M/s.  Auto  Sales  (Properties)  through  Smt.  Manju  

Gupta – respondent herein filed a suit for eviction and recovery

of arrears of rent against M/s. Commercial Auto Sales (P) Ltd.,  

through its Director Brij Mohan Gupta - appellant in the Court of  

Small Causes, Allahabad with regard to portion of premises on  

the ground floor of building at 18, Kanpur Road, Allahabad. The  

respondent averred in the plaint  that the subject premises were  

under the tenancy of the appellant for rent of Rs.11,000/- per  

month;  that  tenancy commenced from the first  day of every  

English  calendar  month  and  ended  on  the  last  day  of  each  

month; that vide notice dated March 14, 1997 the balance rent  

was demanded and tenancy of  the appellant  was terminated  

and  despite notice of demand and termination of tenancy, the  

appellant  neither  paid  the  rent  nor  vacated  the  premises  

necessitating filing of the suit.

4. The appellant  traversed the plaint  and denied the  

relationship  of  landlord  and  tenant  between the  parties.  The  

appellant set up a specific  case that the subject premises were  

not let out to him but in the family  settlement dated August 23,  

1993 these premises came to the  share of the husband of the  

respondent (Smt. Manju Gupta) but were given to the appellant  

(Brij  Mohan Gupta) to carry on business of M/s. Commercial  

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Auto Sales (P) Ltd. and the appellant was to pay Rs.10,000/-  

per month by way of compensation for use and occupation of  

the premises for carrying on business of M/s. Commercial Auto  

Sales  (P)  Ltd.  although  compensation  of  Rs.10,000/-  was  

designated as rent with increase  every three years  at the rate  

of  10%.  

5. The Small Causes Court (ADJ-II), Allahabad, after  

recording evidence and hearing the parties, decreed the suit for  

eviction  and  arrears  of  rent  on  February,  2003.  The  Small  

Causes  Court  considered  the   evidence  and  the  family  

settlement thus :

“………I perused the statement of this witness thoroughly. A  Memorandum  of  Understanding  between  the  parties  regarding the property in dispute (Paper No. 68Ga Exhibit-1)  has been filed by the defendant in the court. This settlement  deed  is  proved  by  DW-1  Sanskar  Gupta.   I  perused  the  statement of DW-1 Sanskar Gupta with respect to settlement  deed. This witness for the defendant said in his statement that  I am working at the post of Director in Commercial Auto Sales  Pvt.  Ltd.  My  mother  was  partner  in  M/s.  Auto  Sales,  My  mother and father and I were partners in Auto Sales. These,  Commercial  Auto Sales and M/s.  Auto Sales,  both are our  family  firms. The business of  these both the firms is  being  carried on at 18 Kanpur Road.   After it a family settlement  amongst us was arrived on 23.8.1993. This deed is paper no.  60Ga/1 to  60Ga/7.  There are signatures of  my father B.M.  Gupta, Smt. Madhu Gupta, Sri Anil Gupta, Smt. Manju Gupta  and  Sanskar  Gupta  on  this  deed,  Smt.  Madhu  Gupta  and  B.M.  Gupta  are  my mother  and father.  Sri  Anil  Gupta  and  Smt. Manju Gupta are my chacha chachi (Uncle and Auntie).  This  witness  in  examination  in  chief   also  said   that  the  property  was given to Anil Gupta  by virtue of this  settlement  

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and  the  business  of  Commercial  Auto  Sales  was  given  to  Shri Brij Mohan Gupta the business of Auto Sales was given  to  Anil Gupta. This witness also said in his statement that we  are doing business in the aforesaid premises by virtue of the  family  settlement. No tenancy was created between me and  Anil  Gupta.  We  are  paying  Rs.10,000/-  monthly  as  compensation.  It  was  settled  in  the  family  settlement  that  there will be an enhancement of 10% after three years on this  amount of ten thousand. After three years I enhanced 10% on  the amount of compensation. Two notices were given to me  on behalf of Auto Sales. No rent was due on me at the time of  aforesaid notices. This witness has admitted on page no. 13  of  his  statement  that  there  is  a  provision  according  to  the  terms  of  settlement  for  enhancement  of  rent  of  10% after  expiry of each three years period. The rent was enhanced by  10% from August 1996 on the basis of  this settlement.  No  enhancement  of  10%  was  done  in  the  year  1999.  This  witness in his cross-examination at page 14 has admitted that  it  is true that  I  am depositing Rs.11,000/-  less in rent  from  August  1999.  The  plaintiff  gave  notice  for  arrears  of  rent  before filing of the suit. This notice was received by me. There  was  no  rent  due  on  me  therefore  I  did  not  deposit.  I  thoroughly  examined  the  statements  of  aforesaid  both  the  witnesses. From these witnesses it  is clearly proved that  a  family  settlement  was  written  between  both  the  parties  on  23/8/1993. On the basis of which the premises in dispute was  let out to the defendant Commercial Auto Sales on rent at the  rate of Rs.10,000/- per month…….”

6. Before  the  High Court,  in  the  revision  application  

preferred  by  the  present  appellant  under  Section  25  of  the  

Provincial Small Causes Courts Act, 1887 against the judgment  

and decree for eviction and the arrears of rent, it was urged that  

there was no relationship of landlord and tenant between the  

parties and that the appellant was in occupation of the subject  

premises pursuant to the family settlement.  The learned single  

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Judge of the High Court, however, was not persuaded by  the  

contention of the appellant and held that there was no  illegality  

in  the  judgment  of  the  trial  court.   He  held  that  there  was  

relationship  of  landlord  and  tenant  between  the  parties  and  

consequently dismissed the revision application on December  

10, 2007.  

7. Mr.  Altaf  Ahmed,  learned  senior  counsel  for  the  

appellant  took  us  through  the  various  clauses  of  family  

settlement and submitted that the intention of the parties was  

not to create a relationship of landlord and tenant.  He would  

submit   that  even  if  it  be  assumed that  the  said  settlement  

created lease, such lease was not determinable. He would also  

urge  that  Small  Causes  Court  had  no  jurisdiction  and  

competence to try the suit.  

8. Mr. Jaideep Gupta, learned senior counsel for the  

respondent stoutly defended the judgment of the High Court.

9. That  there  was  a  family  settlement  reduced  into  

writing  on  August  23,1993  between Brij  Mohan  Gupta,  Smt.  

Madhu Gupta and Sanskar Gupta as parties of the ‘first part’  

and Anil Gupta and Smt. Manju Gupta as parties of the ‘second  

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part’ is not in dispute. Some of the clauses of the said family  

settlement, which are relevant, read thus :-

“4. It  is  specifically  agreed that  the management  and ownership of  the property situated at  18-P.D. Tandon  Road,  Allahabad as was earlier  jointly owned by Shri  Brij  Mohan Gupta and Anil  Gupta shall  exclusively vest  in the  Parties  of  the  SECOND PART free  from all  charges  and  encumbrances  and  PARTIES of  the  FIRST PART or  any  other Persons claiming for or under trust shall not have any  kind of right, title or interest in the same.

5. M/s. Commercial Auto Sales (P) Ltd. which will  be taken over by Shri Brij Mohan Gupta shall have an option  to carry on its business activities from the show room which  is presently in its possession as per the site plan enclose  herewith,  on  his  agreeing  to  pay  a  monthly  rent  of  Rs.10,000/- with a provision for increase at the rate of 10%  after  the  expiry  of  every  period  of  3   years  and  for  the  purpose of calculating increase of 10% the rent paid for the  immediately preceding block of 3 years will be relevant. For  this  purpose  a  forma  agreement,  if  so  desired  by  the  PARTIES hereunto, shall be drawn up and executed.

6. M/s.  Commercial  Auto  Sales  (P)  Ltd.  shall  withdraw its business from the shop  situated at 37, Sheo  Charan Lal Road, Allahabad and the possession of the same  together  with all  rights  therein  shall  belong to and vest  in  exclusively in the Parties of the SECOND PART.

7. The  account  of  the  parties  hereto  and  the  concerns  in  which  they  shall  have  exclusive  rights  after  implementation  of  the  MEMORANDUM  OF  UNDERSTANDING   shall  be  settled  on  the  basis  of  reconciliation statement as would be prepared by M/s. S.K.  Garg  &  Co.,  Chartered  Accountants,  Allahabad,  who  are  hereby authorized  specifically  for  this  purpose and whose  finding  shall  be  conclusive  and  binding  on  the  PARTIES  hereto.

8. The  understanding  arrive  at  amongst  the  PARTIES of  the FIRST PART and SECOND PART on its  further implementation shall be irrevocable and binding  on  them and none of them and/or any other persons claiming  for or under trust shall be entitled to re-open the same.”  

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10. When we turn to the judgment of the High Court, in  

the  first  place,  we  find  that  the  High  Court  proceeded  on  

absolutely erroneous premise that there is no specific denial of  

relationship of landlord and tenant between the parties in the  

written statement.  The learned single Judge does not seem to  

have  fully  adverted to  the written statement.   In  the written  

statement, it is stated, :

“2……….The accommodations in dispute was not let out to  the defendant but in the family settlement this premises was  allotted in the share of Sri Anil Gupta and the business of the  defendant went into the share of Sri Brij  Mohan Gupta, Smt.  Madhu  Gupta  and  Sri  Sanskar  Gupta  and  at  the  time  of  family  settlement  it  was  settled  that  the  business  of  defendant shall be carried out in this premises and in lieu of  the use of the premises Sri B.M. Gupta will pay Rs.10,000/-  (Rs. Ten Thousands per month) rent…………   5…………It is hereby also asserted that in view of the family  settlement dated 18.12.1993 this rent was fixed by way of  compensation for the use of premises by the defendant but it  was  designated  as  a  rent.  The  alleged  notice  does  not  terminate  the alleged tenancy of  the  defendant.  Moreover  the tenancy of the defendant cannot be terminated and it will  treated as a permanent tenancy.”

Again in para 6 of the written statement it has been stated  

thus;

“6. That  the  premises  in  question  was  already  in  possession and occupation of M/s. Commercial Auto Sales  and its business was being carried on there in which Sri Anil  Gupta the husband of Smt. Manju Gupta was also a partner  and a  director  by family settlement.   When this business  came  in to  the share of Sri Brij Mohan Gupta, Smt. Madhu  

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Gupta and  Sri  Sanskar  Gupta and premises went  to  the  share of the plaintiff it was thought in the settlement that the  business should be carried in the same premises and in lieu  of  the  use  and  occupation   the  defendant  is  to  pay  Rs.10,000/-  per  month as rent  with increase of  10% after  every year.  It is absolutely baseless to allege that it was let  out on rent to the defendant but in fact it was given in the  family settlement to the defendant to carry on business.”

How  could  on  the  face  of  the  averments  in  the  written  

statement, as aforequoted, it be  said that there is no specific  

denial  of  relationship  of  landlord  and  tenant  between  the  

parties?  It seems  that the learned single Judge did not advert  

to the written statement fully and properly.  

11. Secondly,  and  very  importantly,  the  High  Court  

failed to find out what was the real intention of the parties in the  

family settlement with regard to retention of subject premises  

by  Brij  Mohan  Gupta  for  carrying  on  business  of  M/s.  

Commercial  Auto  Sales  (P)  Ltd.    It  is  well  settled  that  the  

intention  of the parties  to an instrument  must be gathered  

from  the  terms  thereof   in  the  light  of  surrounding  

circumstances.    In  Union   of  India vs.  Millenium  Mumbai  

Broadcast (P) Ltd.1,  this Court  said that  a document  must be  

construed having regard  to the terms  and conditions  as well  

as  nature thereof. 1 (2006) 10 SCC 510

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12.   The true nature of relationship between the parties  

concerning the occupation of subject premises by the appellant  

was  required  to  be ascertained from the  family  arrangement  

which  the  High  Court   failed   to  do  and  thereby  committed  

grave error in not considering  the matter in right perspective.  

As a matter of fact, a material clause like clause 8 of the family  

settlement has been overlooked altogether affecting decision in  

the matter.    

13. We do not intend to deal with the matter elaborately  

as,  in  our  considered  judgment,  the  matter  needs  to  be  

reconsidered by the High Court, inter alia, on the aspects   as to  

whether under the family settlement dated August 23, 1993, a  

relationship of lessor or lessee (or for that matter landlord and  

tenant) came into existence between the parties and, if answer  

to the said question is in the affirmative, whether such lease is  

determinable.

14. In  what  we  have  discussed  above,  appeals  are  

allowed to the aforesaid extent and judgment of the High Court  

dated December 10, 2007 is set aside. Civil Revision No. 275  

of  2003  is  restored  to  the  file  of  the  High  Court  for  fresh  

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decision as indicated above and in accordance with law. We  

request  the  High  Court  to  expedite  the  hearing  of  revision  

petition and dispose of the same as expeditiously as may be  

possible  and  preferably  within  four  months.  Parties  will  bear  

their own costs.  

……………………J (Tarun Chatterjee)

…….……………..J         (R. M. Lodha)

New Delhi September 9,  2009.

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