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PETITIONER: P.   J. GUPTA & CO.,

       Vs.

RESPONDENT: K.   VENKATESAN MERCHANT & ORS

DATE OF JUDGMENT11/10/1974

BENCH: BEG, M. HAMEEDULLAH BENCH: BEG, M. HAMEEDULLAH KRISHNAIYER, V.R.

CITATION:  1974 AIR 2331            1975 SCR  (2) 401  1975 SCC  (1)  46  CITATOR INFO :  RF         1979 SC1745  (16)  RF         1980 SC 214  (13,14)

ACT: Madras  Buildings  (Lease  &  Rent  Control)  Act,  1960  s. 10(2)(ii)(a)-Scope of.

HEADNOTE: The appellants obtained a lease of non-residential  premises at Rs. 450 p.m. in 1944 and sub-let parts of the premises in 1957.  The Madras Buildings (Lease & Rent Control) Act, 1949 did  not contain any provision prohibiting subletting.   The 1949  Act was repeated and replaced by the Madras  Buildings (Lease  & Rent control) Act, 1960 s. 10(2)(ii)(a)  of  which enacts  that the landlord can evict a tenant on  the  ground that  the tenant has after the 23rd October,  1945,  without the  written consent of the landlord transferred  his  right under  the  lease  or sub-let the  entire  building  or  any portion  thereof,  if the lease does not confer on  him  any right  to  do  so.  In 1964  the  respondent  purchased  the premises and thereafter filed an application under s.  10(2) (ii)  (a)  of the Act to evict the appellant  and  his  sub- tenants.   The  City  Rent Controller  passed  an  order  of eviction.   The Court of small Causes allowed  the  tenant’s appeal holding that in a contractual tenancy the  Provisions of the Transfer of Property Act applied to the exclusion  of the remedied provided under the Act.  The High Court revised this decision. On appeal to this Court it was contended that the rights  of the  Parties were governed by the provisions of the  Act  as they  stood in 1960 and so the appellant was protected  from eviction  under the provisions of cl. (iii) of S. 30 of  the Act. Under  cl.  (iii)  of s. 30 as it originally  stood  if  the rental value of a non-residential building as entered in the property  tax assessment book of the  municipality  exceeded Rs.  400/-  per month the landlord would have  no  right  to Proceed   against   the  tenant  for   eviction   under   s. 10(2)(ii)(a)  of the Act.  This section was amended by s.  3 of  the  Amending,  Act  XI of  1964  which  states  that  a Proceeding  instituted on the ground that such  building  or part  was exempt from the provisions of the  principal  Act.

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shall  abate  in so far as the proceeding  relates  to  such building  or part and that the rights and  privileges  which may have accrued before such date to any landlord in respect of  a non-residential building by virtue of cl. (iii) of  S. 30 of the principal Act would not be enforceable. Dismissing the appeal, HELD:     (1)  The  special procedure provided  by  the  Act displaces  the  requirements of the procedure  for  eviction under the Transfer of Property Act and by an ordinary  civil suit.   The provisions of the Act must necessarily apply  to all  tenancies.   A  tenancy is  essentially  based  on  and governed  by  an agreement or contract even when  a  statute intervenes  to limit the area within which an  agreement  or contract  operates,  or,  subjects  contractual  rights   to statutory  rights and obligations.  In the instant case  the sub-letting wag subsequent to 1945.  The sub-letting of 1957 would be covered by s. 10(2)(ii)(a) of the Act. [403 F-H] M/s.  Raval & Co. v. K. C. Pamachandran & Ors.  A.I.R.  1974 S.C. 818 @ 823, referred to. (2)  Section  3 of the Amending Act applies to (i) cases  in which a proceeding has been instituted "on the ground"  that a non-residential building was exempt from the provisions of the  principal  Act  by virtue of cl. (iii)  of  s.  and  is pending;  and  (ii)  to cases where  rights  and  Privileges before  such  date  to  any  landlord  in  respect  of  non- residential building by virtue of cl. (iii) of s. 30 of  the principal  act  exist  In the kind of,  first  category  the amendment  gays that the pending proceedings s.  the  second kind  of  case,  the  amendment says  that  the  rights  and privileges  of  the Landlord shall cease and  determine  and shall not be enforceable. [405 B-D] In the instant case proceedings under s.(10)(2)(ii)(a) could not  fall under the first category nor are the  "rights  and privileges"  under  the second category  involved.  Whatever rights the landlord had acquired were due to omission of cl. (iii) from 402 s.   30 of the Act by the Amending Act 1964 only.  Prior  to the amendment the effect of s. 30(iii) was that the landlord had  no right to proceed under S. 10(2) (ii) (a) of the  Act because  of the nature of the premises let and  its  monthly rent  and  after the amendment the landlord acquired  a  new right by the removal of this disability. [405F]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 254 of 1971. Appeal by Special Leave from the Judgment & Order dated  the 3rd  September, 1970 of the Madras High Court in C.R.F.  No. 1676 of 1966. S.   T. Desai and A. S. Nambiar, for the Appellant. p.   Ram  Reddy,  P. P. Rao, A. V. V. Nair and T. V.  S.  N. Chari, for the Respondents. The Judgment of the Court was delivered by BEG  J.-The appellant was a tenant who obtained a  lease  of nonresidential  premises situated in the City of  Madras  at Rs. 450/- per month from the landlord on 21-8-1944.  On 9-3- 1957,  a  portion  of the premises was  sublet  to  Shewaran Lachmandas.   On  12-7-1957, another portion was  sublet  to Umasar  Corporation.   At that time, there  was  nothing  to prohibit  sub-letting  either in the lease deed  or  in  the Madras Buildings (Lease & Rent Control) Act, 1949, which was applicable then.  On 3-4-1963, the landlord executed another registered lease deed of the same property in favour of  the

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appellant  for a period of five years from 1-10-1961 at  Rs. 600/-   per  month  (incidentally,  this  period  has   also expired),   This   lease  contained  a   provision   against subletting.   Furthermore, the Madras Buildings  (Lease  and Rent  Control) Act, 1960, (hereinafter referred to  as  ’the Act’), repealing the Act of 1949, had come into force.   The Act  conferred a right under section 10(2)(ii)(a)  to  evict the tenant on the ground :               "(ii)  that  the  tenant has  after  the  23rd               October  1945 without the written  consent  of               the landlord-               (a)   transferred his right under the lease or               sub-let  the  entire building or  any  portion               thereof,  if the lease does not confer on  him               any right to do so". On 26-4-1963, the appellant is said to have sub-let  another portion of the premises to the Umasar Corporation.  On 27-5- 1964,  K. Venkatesan, the respondent before us,  became  the landlord  under  a  sale  deed.   In  December,  1964,   the respondent  landlord  filed  an  application  under  Section 10(2)(ii)(a)  of the Act to evict the appellant  tenant  and his sub-tenants from the whole property.  On 20-9-1965,  the City Rent Controller passed an order of eviction. On  26-3-1966, the Court of Small Causes at  Madras  allowed the tenant’s appeal because it held that the tenant had  the right,  under the original lease of 21-8-1944,  to  sub-let, and  also  because  even  violation  of  a  clause  of   the subsequent  lease of 3-4-1963, prohibiting  subletting,  did riot  entail  a  forfeiture  of  tenancy  rights  under  the provision  of  the Transfer of Property Act.  Its  view  was that, in a case of what 403 it  described as "a contractual tenancy". the provisions  of the Transfer of Property Act applied to the exclusion of the remedies provided by the Act so that, unless the lease  deed itself provided for a termination of tenancy for  subletting in addition to a condition against sub-letting, the  tenancy right itself could not be forfeited or determined by such  a breach of the contract of tenancy Upon a revision application under Section 25 of the Act, the High Court of Madras reversed the judgment and order of  the Small  Cause  Court.   It  hold  that  the  relief   against forfeiture was, not obtainable in cases governed by  Section 114(A) in the Transfer of Property Act where, as in the case before us, there was an express condition against assigning, letting,  or parting of possession.  The lease of  3-4-1963, by which the rights of the landlord and tenants were held by the  High  Court to be governed on the date  of  application under   Section  16(2)(ii)((a)  of  the  Act,  contained   a prohibition  against subletting which involved parting  with possession.  It also referred to Ex. P. 7, dated 12-11-1964, which was a notice of determination of tenancy on the ground of  sub-letting.   It held that, in any case,  there  was  a proved  sub-letting on 9-3-1957 to Shewaran  Lachmandas  and that,  although, there was no prohibition of sub-letting  at that time, the provisions of Section 10(2)(ii)(a) of the Act became  applicable on a parity of reasoning adopted by  this Court in Goppulal v. Thakurji Shriji Shriji Dwarkadheeshji & Anr.(1)  with  regard  to  a  similar  situation  under  the Rajasthan Premises (Control of Rent & Eviction) Act.  Hence, it   allowed  the  respondent  landlord’s  application   and restored  the  order  of eviction passed by  the  City  Rent Controller.   This  Court granted special  leave  to  appeal against  the  judgment and order of the  Madras  High  Court passed on 3-9-1970.

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It  is  clear from the majority view of this Court  in  M/s. Raval  & Co. v. K. C. Pamachandran & Ors(2).  dismissing  an appeal  from a judgment of Fall Bench of Madras High  Court, reported  in  AIR 1967 Madras 57 (FB) that the Act "  has  a scheme  of its own and it is intended to provide a  complete code  in. respect of both contractual tenancies as  well  as what  are  popularly called statutory tenancies".  in  other words,  the special procedure provided by the Act  displaces the  requirements  of the procedure for eviction  under  the ’transfer  of  Property Act and by an ordinary  civil  suit. Therefore, we need not concern ourselves with the provisions of  Transfer  of Property Act. we need only  determine  here whether the landlord respondent satisfied the conditions  of Section  10(2)(ii)(a)  of the Act set out above.   The  High Court  had,  held that a sub-letting had  undoubtedly  taken place  in 1957.  The Small Cause Court had  considered  this fact  to be immaterial on the ground that the provisions  of the Act did not apply to a case, such as the one before  us, which was, in its opinion, governed by the provisions of the Transfer of Property Act only.  We think that the provisions of  the  Act  must necessarily apply to  all  tenancies.   A tenancy is essentially based on and governed by an agreement or contract even when a statute intervenes to limit the area within which an agreement of contract (1) [1969] 3 S.C.R. 989. (2) A.I.R. 1974 S.C. 818, 823 11-255Sup.C1/75 404 operates,  or,  subjects  contractual  rights  to  statutory rights  and  obligations.  In the case before us,  the  sub- letting  was  certainly subsequent to 1945 so that,  on  the plain  language  of the provision, the sub-letting  of  1957 would be covered by Section 10(2)(ii)(a) of the Act. Mr. S. T. Desai, appearing on behalf of the appellants,  has advanced a novel argument which had not been put forward  in the  Courts  below.  It was that the rights of  the  parties were  governed  by the provisions of the Act as  they  stood when  the Act was passed in 1960.  His contention was  that, under the provisions of the Act, before its amendment by the Madras  Buildings (Lease & Rent Control Amendment Act XI  of 1964 (hereinafter referred to as ’the Amending Act’),  which omits clause (iii) from Section 30 of the Act, the appellant was protected from eviction.  He relied strongly on  Section 3 of the Amending Act which reads as follows : "3.  Certain pending proceedings to abate. Every proceeding in respect of any non-residential  building or part thereof pending before any court or other  authority or officer on the date of the publication of this Act in the Fort  St.  George Gazette and instituted on the ground  that such building or part was exempt from the provisions of  the principal Act by virtue of clause (iii) of Section 30 of the principal  Act,  shall  abate in so far  as  the  proceeding relates to such building or part.  All rights and privileges which  may have accrued before such date to any landlord  in respect  of any non-residential building or part thereof  by virtue  of clause (iii) of Section 30 of the principal  Act, shall cease and determine and shall not be enforceable : Provided  that  nothing contained in this section  shall  be deemed  to  invalidate any suit or proceeding in  which  the decree  or  order passed has,been executed or  satisfied  in full before the date mentioned in this section". The effect of Section 30 of the Act containing clause (iii), which was omitted by the Amending Act, may be set out in the language of Section 30 itself : "30.  Nothing contained in this Act, shall apply to

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(i) *          *                   *              * (ii) *         *         *         *         *    * (iii)     Anynon-residential  building, the rental value  of which  on  the  date of the commencement  of  this  Act,  as entered in the property tax assessment book of the Municipal Council,  District  Board,  Panchayat  or  Panchayat   Union Council  or the Corporation of Madras, as the case  may  be, exceeds four hundred rupees per mensem". The  obvious  result of Section 30(iii) of the  Act,  as  it stood before the amendment, was that, if the rental value of a non-residential 405 building,  as  entered  in  the property  tax  book  of  the Municipality,  exceeded Rs. 400/- per mensem, a  description which applies to the premises under consideration before us, the  landlord  would have no right to  proceed  against  the tenant  for eviction under Section 10(2)(ii)(a) of the  Act. Section 3 of the Amending Act, on the face of it, applies to two kinds of cases.  Its heading is misleading in so far  as it  suggests that it is meant to apply only to one of  these two  kinds.   It  applies : firstly, to  cases  in  which  a proceeding  has  been  instituted "on  the  ground"  that  a nonresidential  building "was exempt from the provisions  of the  principal Act" by virtue of clause (iii) of Section  30 of the principal Act" and is pending; and secondly, to cases where, "rights and privileges, which may have accrued before such  date  to any landlord  in  respect,of  non-residential building  by  virtue of clause (iii) of Section  30  of  the principal  Act" exist.  In the kind of case falling  in  the first   category,  the  amendment  says  that  the   pending proceedings  shall  abate.  As regards the  second  kind  of case, the amendment says that "the rights and privileges  of the  landlord  shall cease and determine and  shall  not  be enforceable". On  admitted  facts,  the proceedings  under  section  10(2) (ii)(a) of the Act, now before us, could not fall under  the 1st  category  of cases contemplated by Section 3.  And,  we have been unable to see how any " right or privileges of the landlord" in respect of any non-residential building,  which could  have  conceivably accrued or existed  "by  virtue  of clause  (iii)  of  Section 30 of  the  principal  Act",  are involved here., Whatever rights the landlord respondent  had acquired  were  due  to the omission of  clause  (iii)  from Section  30  of the Act by the Amending Act  of  1964  only. Prior  to  the amendment, the effect of Section  30,  clause (iii) Sec. 30 of the Act was that the landlord had no  right to  proceed  under Section 10(2) (ii)(a) of  the  Act.   The effect of the amendment is that the landlord acquires a  new right  by the removal of this disability.  Section 3 of  the Amending  Act  could not possibly be so  interpreted  as  to defeat  the object of Section 2 which clearly amplifies  the previously limited remedy by removing a restriction upon its use.   Hence, we fail to see how any argument  built  around Section  3 of the Amending Act could help the  appellant  at all.   Apparently, this is the reason why no  such  argument was advanced anywhere earlier.  It is not necessary, for the purposes  of  the. case before us, to  speculate  about  the types of cases which may actually fall within the two  wings of  the  obviously unartistically drafted Section 3  of  the Amending  Act.   It is enough for us to conclude,as  we  are bound  to on the language of the pro-vision, that  the  case before us falls outside it. 406 Learned  Counsel  for the respondent has,  quite  correctly, contended that the right itself was created by the amendment

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of  1964  so far as the landlord  respondent  is  concerned. Before  that,  the special remedy provided by  the  Act  was denied to him because of the nature of the premises let  and its  monthly rent.  Its benefit was extended to him in  1964 so  that,  after the amendment, he could use  the  procedure contained in Section 10 of the Act.  The amendment  received the assent of the President on 5. 6. 1964 and was  published in  the  State Gazette on 10-6-1964.  The  proceeding  under section  10(2)(ii)(2) of the Act was commenced in  December, 1964.  We find no force whatsoever in the appeal before  us. The  parties agree that the appellants will get  six  months from  today  to  vacate  the  premises.   Subject  to   this undertaking  by  the appellants and respondent  landlord  to give effect to this agreement this appeal is dismissed  with costs. P.B.R.                                                Appeal dismissed. 407