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SUPREME COURT OF INDIA
R.C.Lahoti, CJI., P.K.Balasubramanyan, J.
G.Reghunathan
Versus
K.V.Varghese
Case No. : 5188 of 2005 (Arising out of S.L.P (C) No. 4189 of 2004)
Date of Decision : 8/23/05
Advocates Appeared: Sasi C.K. : Mehta Dhruv : Raghunath A. : Sikri A.D.
Held : From the above, it is clear that the question depends on the facts of the case. The nature of the building, the purpose of the letting, the terms of the contract and the nature of the interference with the structure by the tenant, are all relevant. The destruction or damage has to be adjudged from the stand point of the landlord. Let us look at the facts in the present case. The building is 75 years old. According to the tenant, it is 80 years old. The difference is not of any significance. It is the northern room in a building consisting of a number of rooms. It is let out for 15 years for a jewellery trade. The term has, of course, not come into effect for want of registration of the deed. The door in the western wall has been bricked up. The windows on the northern, western and southern walls have also been bricked up. Obviously, the bricked up portions can be removed and the doors and windows restored without weakening the structure. But more importantly, the level of the floor was lowered, the rafters cut, two concrete pillars erected and a rolling shutter fixed. The lowering of the floor and the tampering with of the room, is of some significance. They could lead to impairment of the value or utility of the building, materially and permanently. That again has to be judged in the light of the surrounding circumstances. But a rolling shutter has been fixed. That provides more security to the premises. The height of the floor can be restored without impairment to the structure. Here, we find that the landlord has not even pleaded that the alterations made by the tenant have destroyed or reduced the value or utility of the building materially and permanently. No doubt, he has stated so in his evidence. But the tenant has stated that, considering that it was a jewellery business that was being started, these things had to be done. Securing of the premises was essential. He had given to the landlord Rs. 85,000/- as security to be returned, when he vacated the building. The value of the building, if at all, has only been enhanced. In this state of the record, it is not possible to infer that the acts of the tenant have materially and permanently destroyed or reduced the value or utility of the building. The age of the building cannot be ignored. The purpose of the letting cannot be ignored. We find that the Authorities below have not approached the question from the proper perspective. They have not given sufficient emphasis to the statutory requirement of the effect being material and permanent. It is “material and permanent”. The words are not disjunctive, like in some other Acts. Here the landlord had not proved the material and permanent impairment in value or utility. One suspects that the value and utility are enhanced. The landlord admits that he will get a higher rent if the room is again let out. We are, therefore, satisfied that interference is justified. We hold that the landlord has failed to prove that the acts of the tenant constitute the user of the building in such a manner as to destroy or reduce the value or utility of the building materially and permanently. We set aside the order for eviction under Section 11(4)(ii) of the Act. (Paras 12 and 13)
(ii) Kerala Buildings (Lease and Rent Control) Act, 1965—Section 11(2)—Eviction petition on ground of default in payment of rent—Tenant-appellant failed to pay rent from 5-10-1988 despite demand notice from landlord—He deposited rent in the proceedings—Tenant had deposited Rs. 85,000/- as security which landlord was liable to refund at the time of vacating the tenancy room—Whether the fact of security deposit could be taken note of as an amount available with landlord for being adjusted against rent due? Since tenant had deposited rent even while filing objection in Rent Control Court, question left open and tenant given two months time to deposit rent arrears in terms of Section 11(2)(c) of the Act so as to avert execution of eviction order.
Held : There cannot be any dispute that the tenant had not paid the rent from 5.10.1988 onwards as claimed by the landlord. He had deposited the rent in the proceeding. If he has done so, it is relevant only for considering the question whether he is entitled to relief in terms of Section 11(2)(c) of the Act. The only question is whether the fact that he had paid a sum of Rs. 85,000/- as security, which the landlord was liable to refund to him at the time of his vacating the room, could be taken note of as an amount available with the landlord for being adjusted against the rent due. Under Section 8(1) of the Act, the landlord is not entitled to take any premium or other like sum. Under Section 8(2), he could receive or stipulate for payment only, an amount not exceeding one month’s rent by way of advance. In both cases, if he has received it, it becomes refundable at once. Hence, it would be an amount available with him. In Issac Ninan Vs. State of Kerala (1995 (2) KLT 848) the High Court has declared that provisions relating to fair rent, that is, Sections 5, 6 and 8 of the Act, put together, are ultra vires the Constitution of India and are void. The questions may have, therefore, to be considered without reference to Section 8 of the Act. In a case where a substantial amount had been received as advance at the time of letting, which was liable to be refunded without interest on the expiry of the lease, this Court held in Modern Hotel Vs. K. Radhakrishnaiah (1989) 2 SCC 686, that when the amount of arrears of rent was smaller than the advance amount held by the landlord on account of the tenant, there was no default in payment of rent and the grant of eviction on the ground of arrears of rent was not justified. This was reiterated in K. Narasimha Rao Vs. T.M. Nasimuddin Ahmed (1996 (3) SCC 45). For the purpose of this case, especially when the tenant had pleaded that he had deposited the rent even while filing his objection in the Rent Control Court, we do not think that it is necessary to pronounce finally on this question. We feel that it is only necessary to clarify that the tenant will have two months from today to deposit the rent in arrears till date and the other sums in terms of Section 11(2)(c) of the Act so as to avert the execution of the order for eviction on the ground of arrears of rent granted under Section 11(2) of the Act. (Para 14)
P.K. Balasubramanyan, J.
Leave granted.
1. The tenant is before us. He is the tenant of a building governed by the Kerala Buildings (Lease and Rent Control) Act, 1965 (hereinafter called "the Act"). He took on rent a room in the building belonging to the respondent-landlord. He executed an unregistered, insufficiently stamped rent deed on 5.9.1988 which was accepted by the landlord. He entered into possession thereunder. The lease was taken for the purpose of conducting a gold and silver jewellery shop. As per the rent deed, the term of the lease was 15 years. The rent payable was Rs.750/- a month. A sum of Rs.85,000/- was given to the landlord as security. That amount was to be returned to the tenant when he vacated the room. The monthly rent of Rs.750/- was to be paid by the 5th of the succeeding month. The tenant was given the right to install electrical fittings and to take water and telephone connections. He had the right to install all necessary instruments or equipments in the room for the purpose of gold and silver business.
2. Disputes seem to have arisen immediately thereafter. The tenant did not tender the rent that fell due on 5.10.1988. He removed a door and three windows from the walls of the room and closed up those openings. He cut-off the rafters in the front to a length of two feet. He lowered the level of the floor by one foot. He erected two pillars touching the walls and fixed a rolling shutter in front of the shop. These were done without the written permission of the landlord.
3. The landlord issued a notice in terms of the proviso to Section 11(2) of the Act. He called upon the tenant to pay the rent in arrears. The tenant failed to tender the rent. He filed an application R.C.P. No.2 of 1990 before the Rent Controller for eviction of the tenant. He invoked Section 11(2) of the Act pleading that the tenant had not paid or tendered the rent due by him for the period from
5.10.1988 to 31.12.1990 in spite of the statutory notice. He also relied on the ground under Section 11(4)(ii) of the Act. He alleged that the tenant had used the building in such a manner as to destroy or reduce its value or utility materially and permanently. His case was that by removing the door and the windows and by his other acts the tenant has incurred the liability to be evicted under Section 11 (4) (ii) of the Act. The tenant resisted the application. He pleaded that the landlord did not cooperate with him in getting electricity and water connections and refused to issue receipts for the rent he tendered. Therefore, he had not paid the rent. He had not done anything in the building which materially affected the value or utility of the building. In fact, what he had done, had only made the building safe and enhanced its value. He pleaded that he was not liable to be evicted. He also deposited the rent that was in arrears so as to enable him to contest the proceedings.
4. A commission was taken out. The Commissioner visited the shop in the presence of the tenant. The Commissioner noted the relevant features and also recorded what the tenant told him in respect of the removal of the door and the windows. He noted the lowering of the floor, the erection of the pillars and the fixing of the rolling shutter. The landlord examined himself as PW 1. He admitted the rent note. He admitted that he had received Rs.85,000/- as advance. He pleaded that in spite of the statutory notice, the tenant had not paid the rent. He also spoke of the alterations to the building brought about by the tenant. The tenant, in his evidence tried to justify the non payment of rent. He deposed that what he had done in the premises was only to facilitate the jewellery trade for which the building was taken on rent. He was entitled to do so on the terms of the rent deed. What he had done, was only to strengthen the premises. The value of the building has not been permanently or materially diminished. He was not liable to be evicted.
5. The Rent Controller found that t
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