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2017 Supreme(Bom) 1629
IN THE HIGH COURT OF JUDICATURE AT BOMBAY AT NAGPUR BENCH
V.M. DESHPANDE, J.
Kunda – Appellant
Versus
Lalit – Respondent
Second Appeal No. 399 of 2002
Decided On : 30-10-2017
For the Appellant : Amol Mardikar, Counsel.
For the Respondents: P.N. Kothari, Counsel.
The doctrine of frustration and the interpretation of contractual terms were central to the court's decision.
Headnote:
frustration - lease of respondent No.1 - Indian Contract Act, Section 56 - AIR 1973 Bombay 358
Fact of the Case:
The respondent/plaintiff leased a shop block from the appellant/defendant No.1. The appellant intended to construct a new complex and agreed to rent a shop to the respondent upon completion of the construction. The respondent filed a suit seeking declaration of tenancy and possession of the new shop block.
Finding of the Court:
The court found that the demolition of the shop block by the Nagpur Improvement Trust did not terminate the tenancy rights of the respondent/plaintiff. The court also held that the agreement for the new construction did not make vacation of the premises by the respondent a condition for performance.
Issues: The main issue was whether the respondent's tenancy would continue in the new premises despite the demolition of the original shop block and the agreement for new construction.
Ratio Decidendi: The court relied on the doctrine of frustration as embodied in Section 56 of the Indian Contract Act and the precedent set in AIR 1973 Bombay 358 to determine that the demolition did not terminate the tenancy rights. The court also interpreted the agreement for new construction to find that vacation of the premises was not an essential term for performance.
Final Decision: The appeal was dismissed with costs, as the court found no substantial question of law involved.
1. Heard learned counsel Shri Amol Mardikar for the appellant and learned counsel Shri P.N. Kothari for the respondent.
2. The present second appeal was admitted on 17.12.2002 on following substantial question of law:
“Whether the lease of respondent No.1 would continue in the new premises on the same terms and conditions irrespective of the clause in the agreement that the terms and conditions would be agreed upon by the parties on completion of new construction?”
3. The only submission, advanced before this Court by learned counsel for the appellant, is that in view of doctrine of frustration, as embodied in Section 56 of the Indian Contract Act, the impugned judgment and decree passed by the Lower Appellate Court is required to be set aside. No other point was pressed into service at the time of hearing.
4. The present appeal is filed by original defendant No.1. The respondent/plaintiff's suit i.e. Regular Civil Suit No.2699 of 1991 was dismissed by learned Judge of the Trial Court on 15.9.2000. An appeal i.e. Regular Civil Appeal No.995 of 2000 carried against the said judgment and decree was partly allowed by the Lower Appellate Court vide judgment and decree dated 4.5.2002. The operative portion of the said judgment is as under:
“ORDER
Appeal is partly allowed with costs.
It is declared that the plaintiff is the defendant no.1's lessee/tenant.
Defendants are directed to deliver possession of the shop block in the new construction to the plaintiff within three months from the date of this order.
Decree be drawn up accordingly.”
Sd/- Y.D. Shinde,
7th Addl. District Judge, Nagpur.
5. Following are the admitted position on record.
6. Appellant/defendant No.1 is owner of Plot No.741, situated at Bajaj Nagar, Nagpur on which shop blocks including suit shop block no.1 was constructed. As per agreement dated 19.5.1988 (Exhibit 93), shop block no.1 was let out to respondent/plaintiff on rent of Rs.450/- per month after accepting Rs.10,000/- from him by way of deposit. As per the said agreement, tenancy was for a period of 11 months however, having covenant of its renewal. It is admitted position that after the expiry of the original period of 11 month, respondent/plaintiff continued his occupation as a tenant in the suit shop block on payment of rent to Appellant/defendant No.1 and his occupation and possession as tenant were never objected by appellant/defendant No.1.
7. Appellant/defendant No.1 was intending to construct new shop-cum-residential complex on the plot. It was found that unless and until blocks are vacated, it will not be possible to raise new construction. Therefore, another agreement dated 23.8.1990 (Exhibit 90) was executed in between the parties by which respondent/plaintiff agreed to vacate the shop block and subject to some conditions to be agreed upon by the parties on completion of new construction work of the building, one shop was to be rented out to the respondent/plaintiff.
8. With the aforesaid admitted position on record, it is the contention of the respondent/plaintiff that appellant/defendant No.1 got plan of new construction sanctioned from the sanctioning authority namely the Nagpur Improvement Trust by representing that the shop in possession of the respondent/plaintiff is an unauthorized one and the said will be demolished. Such undertaking was given by appellant/defendant No.1 with the Nagpur Improvement Trust. The respondent/plaintiff, therefore, filed a suit with the following prayers:
“It is, therefore, prayed that it be declared by decree of declaration that the plaintiff is the tenant of defendant no.1 and cannot be evicted from the suit premises without following the due process of law.
(b) The defendants be perpetually restrained from disturbing or interfering with the possession of the plaintiff over shop block no.1 in the existing construction on plot no.741, Bajajnagar, Nagpur.
(c) The defendants be directed by mandatory injunction to deliver the possession of one shop block in the new constr
