1. Lease of a building with fixed machinery — Application for fixation of reasonable rent under Section 9(1) of the Madhya Pradesh Accommodation Control Act, 1955. (Para 1 , 7 )
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1964 Supreme(SC) 204
SUPREME COURT OF INDIA
P.B. GAJENDRAGADKAR, C.J.I., J.C. SHAH AND N. RAJAGOPALA AYYANGAR, JJ.
Uttamchand, Appellant
Versus
S. M. Lalwani, Respondent.
Civil Appeal No. 100 of 1964.
Advocates appeared
M/s. B. R. L. Iyengar and A. G. Ratnaparkhi, Advocates, for Appellant; Mr. N. C. Chatterjee, Senior Advocate (M/s. R. C Agarwal and M. S. Gupta, Advocates, with him), for Respondent.
Advocates:
A.G.Ratnaparkhi, B.R.L.Iyengar, M.S.Gupta, N.C.CHATTERJI, R.C.AGRAWAL
A.G.Ratnaparkhi, B.R.L.Iyengar, M.S.Gupta, N.C.CHATTERJI, R.C.AGRAWAL
A lease of a building containing industrial machinery is not 'accommodation' if the dominant intention of the parties is to lease the industrial plant, and the building is merely incidental to the operation of that plant.
Headnote:(A) Madhya Pradesh Accommodation Control Act, 1955 - Sections 3 and 9(1) - Definition of 'accommodation' - Lease of building with fixed machinery - Whether such lease falls within the ambit of the Act for the purpose of fixing reasonable rent - Fittings affixed to a building for 'more beneficial enjoyment' refer to incidental amenities for the occupant and not primary industrial machinery - Dominant intention of the parties is the deciding factor in determining the character of the lease - Where the primary object of the lease is the operation of a mill and the building is incidental to it, such a lease is not a lease of 'accommodation' as defined under the Act. (Paras 11, 12)
(B) Interpretation of Statutes - Dominant intention of parties - In determining whether a lease is for 'accommodation', the court must look at the dominant intention of the parties in executing the document. (Para 10)
Facts of the case:
A lease was executed for a mill building along with fixed machinery and accessories. The lessee approached the Rent Controller for the fixation of reasonable annual rent under the relevant Act. The Rent Controlling Authority and the District Judge held that the lease was governed by the Act. However, the High Court reversed this decision, holding that the lease did not fall within the protection of the Act as the property was not 'accommodation' within the meaning of the statute.
Findings of Court:
The machinery fixed in the building was not for the more beneficial enjoyment of the building but was the primary object of the lease. The building was let out inevitably because the mill was located within it.
Issues: Whether the lease of a building with fixed machinery constitutes a lease of 'accommodation' within the meaning of Section 3 of the Madhya Pradesh Accommodation Control Act, 1955.
Ratio Decidendi: The court ruled that the term 'fittings' in the definition of accommodation refers to incidental amenities. Since the dominant intention of the parties was to lease the mill and not the building as a residential or non-residential accommodation, the lease does not fall under the Act. The absence of an express exemption for mills in the Act does not automatically bring them under the definition of 'accommodation'.
Result: Appeal dismissed.
Legal Category Hierarchy
Table of Contents
2. Whether the lease of a building with machinery constitutes accommodation under Section 3(a)(y) — Dominant intention of parties regarding the subject matter of the lease. (Para 1 , 3 , 8 , 10 )
3. Machinery not intended for more beneficial enjoyment of building — Dominant intention was to lease a mill, making the building incidental to the machinery. (Para 11 , 12 )
4. A lease of a building containing machinery for industrial use is not accommodation if the dominant intention is to lease the mill itself. (Para 11 , 12 )
5. Appeal dismissed — Application for fixation of reasonable rent rejected. (Para 14 )
6. What constitutes fittings for the more beneficial enjoyment of a building under Section 3(a)(y)(3)?
Fittings must be those made in the building to afford incidental amenities for the person occupying the building. Industrial machinery fixed for the purpose of running a mill does not qualify as such fittings. (Para 11 )
7. How is the character of a lease determined when it involves both a building and industrial machinery?
The court applies the test of dominant intention. If the primary object is to lease the mill and the building is incidental to that purpose, the lease is not for accommodation. (Para 10 , 12 )
8. Does the absence of an express exemption in Section 2(1) imply that a property is accommodation under the Act?
No. A lease must first satisfy the definition of accommodation under Section 3. If it does not meet this definition, the lack of an express exemption in Section 2 is irrelevant. (Para 13 )
Judgment
GAJENDRAGADKAR, C.J.I.:
This appeal by special leave raises a short question as to whether the lease executed by the respondent, Sardar Mal Lalwani in favour of the appellant, Uttamchand, can be said to be a lease of an accommodation within the meaning of S. 3 of the Madhya Pradesh Accommodation Control Act, 1955 (No. XXIII of 1955) (hereinafter called the Act). The appellant moved the Rent Controller to fix the rent payable by him under the lease in question in respect of the property demised to him under S. 9(1) of the Act. This application was resisted by the respondent on the ground that the lease in question did not fall within the protection of the Act as the property demised to the appellant was not accommodation within the meaning of S. 3, and the rent payable by the appellant to the respondent was, therefore, not payable for any accommodation to which the Act applied. The Rent Controlling Authority at Bhopal rejected the respondent s contention and, on the merits, held that Rs. 2,400/- per annum should be the reasonable annual rent payable under the lease.
2. The respondent then went in appeal to the District Judge at Bhopal and urged that the Rent Controlling Authority had no jurisdiction to fix the rent between the parties and, on the merits, the rent fixed was unduly low. The District Judge rejected the respondent s contention as to jurisdiction and held that the lease in question was governed by the provisions of the Act. In regard to the merits of the order passed by the Rent Controlling Authority, The District Judge held that the rent had been fixed by the said Authority more or less arbitrarily without taking into consideration the definition of reasonable annual rent and so, he set aside the order under appeal and remanded the case to the Rent Controlling Authority, directing it to make an enquiry and give its finding as to the reasonable annual rent in accordance with the observations made in his judgment.
3. The respondent then moved the High Court of Madhya Pradesh in its revisional jurisdiction and he challenged the validity of the order of remand on the ground that the lease did not fall within the protection of the Act, and so, the appellant was not entitled to ask for the determination of a reasonable annual rent under S. 9(1) of the Act. This plea has prevailed in the High Court with the result that the respondent s revisional application has been allowed and the application made by the appellant for the fixation of a reasonable annual rent has been dismissed. It is against this order that the appellant has come to this Court by special leave; and the only point which Mr. B. R. L. Iyengar has raised on his behalf is that in coming to the conclusion that S. 9(1) of the Act did not apply to the lease in question, the High Court has misconstrued the character of the lease and has misjudged the effect of the relevant provisions of the Act.
4. The Act has been passed by the Madhya Pradesh Legislature in 1955 in order to provide for control of letting, and rent of residential and non-residential accommodation and for prevention of the eviction of tenants therefrom. S. 2(1) of the Act provides that accommodations described in cls. (a) to (d) will not be covered by the provisions of the Act. S. 2(d), for instance, provides for places of entertainment generally used as such, including land adjoining or near such places, which is used for entertainment of people or catering. In other words, places of entertainment specified by cl. (d) of S. 2 like other properties mentioned in cls. (a), (b) and (c) of the said section are outside the protection of the Act. S. 2 (2) authorises the Government to exempt from all or any of the provisions of the Act any accommodation which is owned by any educational, religious or charitable institution or by any nursing or maternity home the whole of the income derived from which is utilised for that institution or nursing home or maternity home.
5. Having thus provided for exemp
