TMI Blog2011 (5) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... od of six months. The appellant is allowed three months time to deliver vacant possession of the suit premises to the respondents subject to its filing usual undertaking before this Court within four weeks. - CIVIL APPEAL NO.3911 OF 2011 (Arising out of Special Leave Petition (C) No.24296 of 2009) and CIVIL APPEAL NO.3912 OF 2011 (Arising out of Special Leave Petition (C) No.24558 of 2009 - - - Dated:- 4-5-2011 - SINGHVI, G.S. AND GANGULY, ASOK KUMAR, JJ. JUDGMENT G.S. Singhvi, J. 1. Leave granted. 2. These appeals are directed against judgment dated 27.7.2009 of the Division Bench of the Kerala High Court whereby the revisions filed by the appellant against the order passed by District Judge, Ernakulam (hereinafter referred to as, the Appellate Authority ) under Section 18 of the Kerala Buildings (Lease and Rent Control) Act, 1965 (for short, the 1965 Act ) were dismissed and the direction given by IIIrd Additional Munsiff and Rent Control Court, Ernakulam (for short, the Rent Control Court ) for vacating the suit premises was confirmed. 3. A.B. Abdul Khader (predecessor of the respondents) leased out the suit premises comprised in Survey Nos.341/1 and 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject as hereunder provided. (a) xxx xxx xxx (b) xxx xxx xxx (c) The Lessee shall permit the Lessor or his authorised agents with or without workmen during business hours to enter upon the demised premises for the purpose of viewing the condition thereof and from time to time for the purpose of effecting the necessary repairs and maintenance as hereunder provided. (d) The Lessee shall deliver up the said demised premises on termination of the lease in as good order and condition as they were in at the time when the lease hereby created commenced subject to determination due to normal wear and tear and defects, if any, for want of proper repair and maintenance which is the liability of the lessor as hereinafter mentioned. 2. The Lessor hereby covenants with the Lessee as follows:- (a) Subject to the due observance and performance of the terms, covenants and conditions by the Lessee herein on their part to be observed and performed the lessee shall have the right during the continuance of the lease to use the premises without interruption by the Lessor or any person claiming under or in trust for him. (b) xxx xxx xxx (c) xxx xxx xxx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) and 11(4)(v) of the 1965 Act. By an order dated 11.4.2001, the Rent Control Court allowed both the petitions and directed the appellant to vacate the premises. The appeals preferred against that order were allowed by the Appellate Authority and the order of eviction was set aside. While reversing the finding recorded by the Rent Control Court that the appellant had ceased to occupy the suit premises continuously for six months without reasonable cause, the Appellate Authority observed as under: I find merit in the submission of the learned counsel for the appellant that suspension of business activity on account of extreme financial crunch, at the same time keeping the unit open and alive for operation cannot amount to cessation of occupation without valid reasons. Ext. C1(a) notice conveys eloquently that there was no intention to abandon possession and the tenant did continue occupation. Business activity was not being run on account of peculiar circumstances. Till 2.8.1999 the premises were kept open and alive for operation. It is important to note that the employees of the tenant were not directed not to come to the establishment on any day prior to 2.8.199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of occupation prior to 2.8.1999 at any rate. The wild growth perceived by the commissioner and reported in Ext. C1 cannot in these circumstances tilt the scales in favour of the landlords. I am in these circumstances of the opinion that the learned Rent Control Court erred in coming to the conclusion that the landlords have succeeded in proving cessation of occupation for a period of 6 months immediately prior to the filing of the petitions without reasonable cause. I am unable to concur with the conclusion of the learned Rent Control Court on this aspect. I am in these circumstances satisfied that the challenge raised on this ground also deserves to be upheld. 5. Civil Revision Petition Nos.579 and 580 of 2002 filed by the respondents were dismissed by the Division Bench of the High Court vide judgement dated 18.12.2006. The High Court agreed with the Appellate Authority that the evidence produced by the landlord was not sufficient for recording a finding that the tenant had ceased to occupy the premises for a continuous period of six months without reasonable cause. 6. During the pendency of the revisions before the High Court, the respondents filed fresh rent control p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the cessation of occupation if any? (7) Whether the Petitioners are entitled for an order of eviction u/s 11(4)(v) of the Act? (8) Relief and costs? 9. After considering the pleadings and evidence of the parties, the Rent Control Court held that the petitions filed by the respondents were not barred by res judicata and Section 15 of the 1965 Act cannot be invoked for denying relief to them because two sets of rent control petitions were based on different causes. However, the respondents' plea that the appellant was in arrears of rent was rejected on the ground that no evidence had been produced by them to prove the same. The Rent Control Court then considered the question whether the appellant had ceased to occupy the suit premises since September, 2001 without reasonable cause and answered the same in affirmative. The Rent Control Court referred to the evidence produced by the parties including the reports Exhibits C1 and C2 produced by Advocate Commissioners PW2 and PW3 and recorded the following observations: (i) From Ext.C1 report filed by PW2 it can be seen that the two entrance gates on the northern side of the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were covered with dust and rust due to non use. (vii) Even though the condition of the petition schedule buildings happened to be as noted by PW2 and PW3 to a limited extent to non-maintenance and repairs it cannot be found that it happened only due to non-maintenance and repairs. (viii) The calendars for the year 2001 noted by PW3 inside the petition schedule building in RCP No.38/03 and the notice dated 01.10.2001 affixed at the front shutter of the same building clearly shows that both the petition schedule buildings were not been opening from 1.10.2001 towards till the inspection date. Since the petition schedule buildings were not opened since September, 2001 the inability of the Petitioner to carry out the repairs and maintenance also is to be looked into. (emphasis supplied) 10. The Rent Control Court then considered the plea of the appellant that on account of pendency of the proceedings under the 1985 Act, the staff strength was reduced to bare minimum but discarded the same on the ground that staff attendance register, muster roll, wages register maintained in the office as also the document showing purchase and sale of the goods, payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncessions were given to the Respondent company by the AAIFR. But as per ext.B9 no restriction is seen imposed on the work of respondent company all together or particularly in the schedule buildings at Cochin. As already observed respondents could not produce any of the mandatory prescribed registers such as stock register, day book, muster roll, attendance register wages register etc. to show that any business were being carried out in the petition schedule buildings even with minimum staff. Even it was specifically put to RW1 that due to the proceedings before BIFR and AAIFR, whether the board of directors was resolved to reduce the staff strength she answered that the staff were told not to come and they have agreed for the same. It is something unbelievable. RW1 has produced Ext.B13 series to B25 series invoices to show that they are conducting business to the scheduled property. But on going through ext.B13 series to ext.B25 series it cannot be found that those transactions were made through Kaloor Office where in the petition schedule building situates as these invoices were given to the Chennai office of respondent. The learned counsel for the Petitioner has pointed out that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The High Court referred to the expression reasonable cause used in Section 11(4)(v), the judgment in Paulina Joseph v. Idukki District Wholesale Co-operative Consumer Stores Ltd. (2006) 1 KLT 603 and observed: Interpreting the scope and meaning of reasonable cause provided in section 11(4)(v) of the Act a Division Bench of this Court in Paulina Joseph vs Idukki District Wholesale Co-operative Consumer Stores Ltd., (2006 (1) KLT 603) held that if there is a plausible explanation to the question why the business was not run in the premises continuously, it may be a relevant fact in considering whether there was reasonable cause for cessation of occupation. But it is held that existence of such reasonable cause depends on the facts and circumstances of each cases. It is further held that the occupation of the building depends on the purpose for which it is let and the purpose for which it is used. The nature of the business and the requirement of the physical presence or otherwise of the tenant in the building for the conduct of the business is a relevant fact. But in this case on considering the facts the requirement of physical presence is highly essential to observe that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the finding recorded by the Rent Control Court and the Appellate Authority that the appellant had ceased to occupy the suit premises continuously for six months without reasonable cause was based on misreading of evidence and the High Court committed serious error by approving the same ignoring the finding recorded in the earlier round of litigation, which had become final. Learned senior counsel emphasized that due to pendency of proceedings under the 1985 Act, the appellant could not effectively use the suit premises, but that did not justify a conclusion that it had ceased to occupy the premises. He then submitted that the pendency of case under the 1985 Act was, by itself, sufficient for recording a finding that there was reasonable cause for the appellant to have ceased to occupy the suit premises. Shri Nariman invited our attention to order dated 3.3.2008 passed by AAIFR vide which the appeals filed against the order of the BIFR were dismissed and argued that the impugned order may be set aside because the appellant's financial condition has considerably improved. 15. S/Shri S. Gopakumaran Nair and C.A. Sundaram, learned senior counsels for the respondents argued that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of permanent tenancy, the Rent Control Court shall decide whether the denial or claim is bonafide and if it records a finding to that effect, the landlord shall be entitled to sue for eviction of the tenant in a Civil Court and such court can pass a decree for eviction on any of the grounds enumerated in Section 11 even though the Court may find that such denial does not involve forfeiture of the lease or that the claim is unfounded. Section 11(4)(v) of the Act which has bearing on this case reads as under: (1) to (3) xxx xxx xxx (4) A landlord may apply to the Rent Control Court for an order directing the tenant to put the landlord in possession of the building,- (i) to (iv) xxx xxx xxx (v) if the tenant ceases to occupy the building continuously for six months without reasonable cause. The definition of the term building contained in Section 2(1) is as under: (1). building means any building or hut or part of a building or hut, let or to be let separately for residential or non residential purpose and includes- (a) the garden grounds well's tanks and structures if any, appurtenant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial crunch as a ground to justify non occupation of the building unless cogent evidence is produced by him to prove that he could not carry on the industrial or commercial/business activity due to fiscal reasons which were beyond his control. If the tenant does not use the building for the purpose for which it is let out, he cannot be said to be occupying the building merely because he has put some furniture or articles or machinery under his lock and key. 19. At this stage, we may notice some precedents which throw some light on the true interpretation of the expressions occupy and reasonable cause used in Section 11(4)(v) of the 1965 Act. 20. In Ram Dass v. Davinder (2004) 3 SCC 684, this Court interpreted Section 13(2)(v) of the Haryana Urban (Control of Rent and Eviction) Act, 1973 in terms of which an order of eviction could be passed against the tenant if he is shown to have ceased to occupy the premises continuously for a period of 4 months without reasonable cause. Respondent Davinder was tenant in the shop belonging to appellant-Ram Dass. The appellant filed a petition for eviction of the respondent on the ground that he had ceased to occupy the shop for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the landlord to make out a ground for eviction. The burden of proof lies on him. However, the onus keeps shifting. Once the landlord has been able to show that the tenancy premises were not being used for the purpose for which they were let out and the tenant has discontinued such activities in the tenancy premises as would have required the tenant's actually being in the premises, the ground for eviction is made out. The availability of a reasonable cause for ceasing to occupy the premises would obviously be within the knowledge and, at times, within the exclusive knowledge of the tenant. Once the premises have been shown by evidence to be not in occupation of the tenant, the pleading of the landlord that such non-user is without reasonable cause has the effect of putting the tenant on notice to plead and prove the availability of reasonable cause for ceasing to occupy the tenancy premises. (emphasis supplied) 21. In Brown v. Brash (1948) 1 All. E.R. 922, the Court of appeal was called upon to examine correctness of an order passed by the County Court Judge, who upheld the tenant's claim to possession of the premises and awarded damages against the appellant for tres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll events, establish a de facto intention on his part to return after his absence. (3) But we are of opinion that neither in principle nor on the authorities can this be enough. To suppose that he can absent himself for 5 or 10 years or more and retain possession and his protected status simply by proving an inward intention to return after so protracted an absence would be to frustrate the spirit and policy of the Acts as affirmed in Keeves v. Dean (1) and Skinner v. Geary (3), (4) Notwithstanding an absence so protracted the authorities suggest that its effect may be averted if he couples and clothes his inward intention with some formal, outward, and visible sign of it, i.e., instals in the premises some caretaker or representative, be it a relative or not, with the status of a licensee and with the function of preserving the premises for his own ultimate home-coming. There will then, at all events, be someone to profit by the housing accommodation involved which will not stand empty. It may be that the same result can be secured by leaving on the premises, as deliberate symbols of continued occupation, furniture, though we are not clear that this was necessary to the decision i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o reasonable cause for not using the premises. In every case it is the duty of the Court to satisfy itself that the tenant had no reasonable cause. Absence may be sufficiently prolonged or unintermittent to compel the inference prima facie of a cesser of occupation. The onus is on the tenant in such a case to repel the presumption and to establish that his possession had not ceased or that he had ceased to occupy on account of reasonable cause. In my judgment, this can be established if the tenant proves notwithstanding the intention on his part to return after his absence, his helplessness in remaining absent from the premises. It is true that the tenant should have made proper attempts to discharge the onus in the present case by producing the orders, if not before the trial Court, at least before the Appellate Court. That, however, as stated above, does not permit the Courts to brush aside the requirements of Section 13(1)(k). It is a matter for not awarding the costs. The Court cannot ignore the nature of the tenant's services and his liability to be transferred when deciding the question under Section 13(1)(k). I do not propose to lay down that in every case where a Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession as its primary element, and also includes enjoyment . The word occupy sometimes indicates legal possession in the technical sense; at other times mere physical presence. We have to examine the question whether mere physical possession would satisfy the word occupy within the meaning of S.11 (4)(v) of the Act. In our view mere physical possession of premises would not satisfy the meaning of occupation under S. 1l (4)(v). The word possession means holding of such possession, animus possidendi, means, the intention to exclude other persons. The word occupy has to be given a meaning so as to hold that the tenant is actually using the premises and not mere physical presence or possession. A learned single Judge of this Court in Abbas v. Sankaran Namboodiri (1993(1) KLT 76) took the view that the word occupation is used to denote the tenant's actual physical use of the building either by himself or through his agents or employees. The Division Bench of this Court of which one of us is a party (Radhakrishnan, J.), in Rajagopalan v. Gopalan (2004 (1) KLT SNP.54) interpreting S. 11 (4)(v) took the view that occupation in the context of S.l 1(4) means only physical oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nant in the building for the conduct of the business is a relevant fact. No straight jacket formula can be evolved in the matter of proof of cessation of occupation within the meaning of Section 11(4)(v) of the Act. This intention of the tenant, though not conclusive as such has also relevance in determining whether there was actual cessation of occupation within the meaning of Section 11(4)(v). When it is proved by the landlord that the tenant ceased to occupy the building continuously for six months, the burden of proving that there was reasonable cause for such cessation is on the tenant. Reasonable cause is also a question of fact to be decided in the light of the facts proved in the case. No rigid formula can be evolved for proof of reasonable cause . The facts and circumstances of the case, the particular facts with reference to the business activities of the tenant, the nature of the business, the magnitude of the business, the circumstance which led to the cessation of occupation are all relevant in considering whether there was reasonable cause. If the cessation of occupation was due to circumstances beyond the control of the tenant, certainly the Courts would be inclined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is satisfied on the evidence and/or with the aid of presumptions that the tenant did not occupy the building for such length of time as would cover the statutory period, then the burden would shift to the tenant to show that he had reasonable cause for such non-occupation. Finally it was also observed in para.9 that, 'but, possession must combine with something more to make it occupation. Legal possession does not by itself constitute occupation'. These principles can be safely applied to the facts of this case. 28. In this case, the Rent Control Court, after detailed scrutiny of the pleadings and the evidence of the parties recorded a finding that while the landowners (respondents herein) succeeded in proving that the tenant (appellant herein) had ceased to occupy the suit premises for a period exceeding six months, the latter could not prove that it was occupying the premises or that non occupation thereof was for a reasonable cause. The Rent Control Court took cognizance of the appellant's plea that it was carrying on business activities from the suit premises with reduced staff strength but discarded the same by observing that the relevant records like the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce produced by the parties in the second round was rightly treated as sufficient by the Rent Control Court and the Appellate Authority for recording a finding that the appellant had ceased to occupy the suit premises continuously for six months without any reasonable cause. 30. The question whether the prohibition contained in Section 22(1) of the 1985 Act operates as a bar to the maintainability of a petition filed for eviction of the tenant was considered and answered in negative in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association (1992) 3 SCC 1. In that case, this Court referred to the provisions of the Karnataka Rent Control Act, Section 22(1) of the 1985 Act and observed: 11. Similarly in Civil Appeal No. 2553 of 1991 this question has been raised by the appellant-company to challenge the order of the learned Single Judge of the Karnataka High Court dated March 15, 1991 dismissing the revision petition under Section 50(1) of Karnataka Rent Control Act. For the reasons aforementioned Section 22(1) of the Act cannot be invoked to assail the said order of the High Court on the ground that on the date of passing of the order of the High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly sick companies owning industrial undertakings, the speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined. The provision regarding suspension of legal proceedings contained in Section 22(1) seeks to advance the object of the Act by ensuring that a proceeding having an effect on the working or the finances of a sick industrial company shall not be instituted or continued during the period the matter is under consideration before the Board or the Appellate Authority or a sanctioned scheme is under implementation without the consent of the Board or the Appellate Authority. It could not be the intention of Parliament in enacting the said provision to aggravate the financial difficulties of a sick industrial company while the said matters were pending before the Board or the Appellate Authority by enabling a sick industrial company to continue to incur further liabilities during this period. This would be the consequence if sub-section (1) of Section 22 is construed to bring about suspension of proceedings for eviction i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstituted reasonable cause for cessation of occupation of the premises. The appellant was declared a sick industrial company on 22.6.1998 and IDBI was appointed as the Operating Agency under Section 17(3) of the 1985 Act to examine the viability of the company. Subsequently, State Bank of India was appointed as the Operating Agency. After several hearings, the BIFR passed order dated 19.10.2001 and directed the appellant to sort out all pending issues with secured creditors, Central/State Governments, TIIC, KSIIDC and TNSEP and submit a revised comprehensive and fully tied up rehabilitation scheme to the Operating Agency. For the next about five years, no tangible step is shown to have taken by the appellant for revival of its business activities. In August and November, 2006, the appellant filed applications before the BIFR seeking its permission for issue of two crore equity shares of Rs. 10/- each fully paid up at par to the company's promoters and/or its associates on private placement basis against full consideration to be utilized for rehabilitation. Thereupon, the BIFR passed order dated 16.3.2007. Three appeals were filed against that order. The AAIFR dismissed the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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