2016 (5) TMI 642 - HC - Indian Laws

Entitlement to possession of the entire property including the portion in respect of which the appellant claims to be a tenant - Held that - Even assuming that the first respondent was aware of the appellant s use and occupation of the premises it would make no difference. It is not necessary that a party possesses or occupies a property only as a tenant. The possession and occupation may also be on the basis of a licence including a gratuitous licence. If it is a bare licence it can be terminated at any time. It is not the appellant s case that it occupied the premises under an irrevocable licence. The possession or occupation could also be as a mortgagee such as in the case of usufructuary mortgage. Thus, mere use and occupation of the premises by the appellant does not justify a conclusion that the first respondent was aware that the appellant s occupation of the premises was as a tenant. The necessity of specifying the tenancy in view of Order 21 Rule 66 (2) (e) of the Code of Civil Procedure is so obvious that it would occur to anyone especially a party such as the appellant who has the benefit of legal advice. We would not assume mala fides on the appellant s part. If the necessity to specify the tenancy is obvious and if we are not to assume mala fides on the part of the appellant bank, it would follow that had the appellant actually been a tenant of the property it would have disclosed the same. That it did not do so is a strong indication that it was not a tenant. The appellant thereby by its own act and deed led the first respondent to believe that it did not possess any tenancy rights in respect of the property. The learned Judge, therefore, rightly held that the appellant is estopped from contending to the contrary. The first respondent or any auction purchaser would not be able to plead an estoppel against a third party who or which is not responsible for any incorrect statement or a failure to mention the relevant fact in the execution proceedings. The estoppel can certainly be pleaded against the decree holder who fails deliberately or otherwise to mention/disclose the right that it claims to have in respect of the property to be sold in execution. In these circumstances, it is not necessary to consider the provisions of Section 13 of the Haryana Urban (Control of Rent & Eviction) Act, 1973. It was relied upon on behalf of the appellant to contend that a tenant cannot be evicted in execution of a decree. On behalf of the respondents it is, however, contended that the Act does not apply. We are, therefore, entirely in agreement with the learned Judge that the appellant is estopped from setting up its claim as a tenant.

Summary

Issues Involved:
1. Whether the appellant bank is in occupation of part of the building as a tenant.
2. Whether the appellant bank is estopped from raising the plea of tenancy.
3. Relief.

Issue-wise Detailed Analysis:

Re: Issue No. 1

The learned Company Judge initially held that the property had been let by the company in liquidation to the appellant, establishing an intention to create a demise in the property in favor of the appellant, which was followed by the receipt of rent. This was based on correspondence between the appellant and the company, including letters discussing rent and electricity payments. However, the High Court disagreed with these findings, emphasizing that mere payment of rent does not create a landlord-tenant relationship. The appellant failed to produce any resolution from either its Board of Directors or the company in liquidation creating a tenancy, nor did it provide any evidence indicating the creation of a tenancy. The High Court noted that the absence of such resolutions and the appellant’s failure to disclose its tenancy claim in the execution proceedings indicated that there was no tenancy. The High Court also highlighted that the property was auctioned without accounting for any tenancy, implying that the value of the property was not affected by a tenancy. Thus, the High Court concluded that the appellant was not a tenant of the property.

Re: Issue No. 2

The High Court reiterated the necessity of specifying a tenancy in the proclamation of sale under Order 21 Rule 66(2)(e) of the Code of Civil Procedure, which requires the proclamation to state every material thing for a purchaser to know in order to judge the nature and value of the property. The appellant failed to mention its tenancy claim in the proclamation, leading the first respondent to believe that the property was free from any tenancy. This omission, whether deliberate or inadvertent, estopped the appellant from later claiming tenancy rights. The High Court held that the appellant, by failing to disclose the tenancy, misled the first respondent and was therefore estopped from raising the plea of tenancy.

Relief

The High Court dismissed the appeal and allowed the cross objections, thereby ruling in favor of the first respondent. The first respondent was entitled to possession of the entire property, including the portion claimed by the appellant as a tenant. The order and judgment were stayed until 31.05.2016 to enable the appellant to challenge the judgment, with interim orders continuing until then.

Conclusion

The High Court concluded that the appellant was not a tenant of the property and was estopped from raising the plea of tenancy due to its failure to disclose this claim in the execution proceedings. The first respondent was entitled to possession of the entire property.