2011 (5) TMI 866 - SC - Indian Laws

Whether as on the date of filing the petition the appellant had ceased to occupy the premises continuously for a period of six months without reasonable cause? Held that - Appeal dismissed. The appellant had neither pleaded nor any evidence was produced to show that due to financial stringency was due to the reasons beyond its control and on that account the suit premises could not be used from September 2001 onwards for the purpose specified in the lease deeds. Therefore the so called financial stringency cannot be construed as reasonable cause within the meaning of Section 11(4)(v). The improvement in the financial health of the appellant after many years cannot impinge upon the concurrent finding recorded by the Rent Control Court and the Appellate Authority that the respondents had succeeded in making out a case for eviction under Section 11(4)(v) and that there was no reasonable cause for the appellant to have ceased to occupy the suit premises continuously for a period 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.

Summary

Issues Involved:
1. Whether the Rent Control Petition Nos. 109 of 2002 and 38 of 2003 were barred by res judicata.
2. Whether the appellant ceased to occupy the premises continuously for six months without reasonable cause.
3. Whether the pendency of proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985 (1985 Act) constituted a reasonable cause for non-occupation of the premises.

Detailed Analysis:

Issue 1: Barred by Res Judicata
The appellant argued that the second set of rent control petitions should be dismissed as barred by res judicata because the issue of non-occupation had already been decided in the first set of petitions. However, the court found that while the two sets of petitions were based on similar grounds, they pertained to different periods of non-occupation. The first set of petitions related to non-occupation from June 1998, and the second set related to non-occupation from September 2001. The court held that the evidence in the second set of petitions was sufficient to establish non-occupation for the specified period, thereby rejecting the res judicata argument.

Issue 2: Cessation of Occupation
The Rent Control Court and the Appellate Authority found that the appellant had ceased to occupy the premises continuously for six months without reasonable cause. The court scrutinized the evidence, including reports from Advocate Commissioners and the lack of business activity, staff attendance, and payment of electricity bills. The appellant failed to produce relevant documents like attendance registers, wage registers, and electricity bills to prove continued occupation. The High Court concurred with these findings, emphasizing that mere legal possession without actual use does not constitute "occupation" under Section 11(4)(v) of the Kerala Buildings (Lease and Rent Control) Act, 1965.

Issue 3: Reasonable Cause for Non-Occupation
The appellant contended that financial constraints due to proceedings under the 1985 Act constituted a reasonable cause for non-occupation. However, the court noted that the appellant did not produce evidence to show that financial stringency was beyond its control or that it prevented the use of the premises for the specified purpose. The court referred to precedents that financial difficulties alone do not justify non-occupation unless cogent evidence is provided. The court concluded that the appellant's financial issues did not constitute a reasonable cause for non-occupation under Section 11(4)(v).

Conclusion:
The court dismissed the appeals, upholding the orders of eviction. The appellant was granted three months to vacate the premises, provided it filed an undertaking within four weeks. The court clarified that during this period, the appellant should not induct any other person or transfer possession.