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TMI Blog2011 (5) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... 41/1 and 2 situated at Ernakulam village to the appellant for its godown and office for a period of 10 years with effect from 1.12.1966. After 2 years and about 2 months, the parties executed two lease deeds dated 3.2.1969, which were duly registered. For the sake of reference, the relevant portions of the lease deed executed in respect of Survey No.341/1 measuring 83 cents are extracted below: "THIS DEED OF LEASE made on the Third day of February One Thousand Nine Hundred and Sixty Nine corresponding to the Fourteenth day of Magha One thousand Eight Hundred and Ninety One of the Sakha Era BETWEEN A.B. ABDUL KHADER son of Alumkaparambli Bava, Indian National, Businessman, aged Forty five years, residing at Alumkaparampil, Chittor Road, Ernakulam in the City of Cochin in Ernakulam District in Kerala State (hereinafter called "the Lessor" which expression shall unless excluded by or repugnant to the context include his heirs, executors, administrators and assigns) of the One Part AND DUNLOP INDIA LIMITED, formerly THE DUNLOP RUBBER COMPANY (INDIA) LIMITED, a Company duly incorporated in India having its Registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son claiming under or in trust for him. (b) xxx xxx xxx (c) xxx xxx xxx 3. Provided always and it is mutually agreed by and between the parties hereto as follows: (a) Notwithstanding the period of lease herein before provided the Lessee shall have the option to terminate the lease by giving three months notice in writing to the Lessor at any time during the continuance of this Lease. (b) The lessees shall have the option to renew the lease for a further period of ten years at the same rent and other terms, covenants and conditions as existed during the initial period of ten years save and except the Clause for renewal provided the Lessee gives notice in writing to the Lessor three months before the expiry of the initial period of ten years of the Lessee's intention to exercise the option. (c) xxx xxx xxx ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat suspension of business activity on account of extreme financial crunch, at the same time keeping the unit open and alive for operation cannot amount to cessation of occupation without valid reasons. Ext. C1(a) notice conveys eloquently that there was no intention to abandon possession and the tenant did continue occupation. Business activity was not being run on account of peculiar circumstances. Till 2.8.1999 the premises were kept open and alive for operation. It is important to note that the employees of the tenant were not directed not to come to the establishment on any day prior to 2.8.1999. I am of the opinion that Ext.C1(a) read as a whole can never convey to a prudent mind that there was cessation of occupation. Physical inability to carry on business activity on account of financial difficulties and the closing down of the production in the factories cannot ipso fact, in the facts and circumstances of the case, lead to the conclusion that the management of the tenant (which had kept the unit open and alive for operation till 2.8.1999) had ceased to occupy the building till 2.8.1999. Cessation to occupy had a physical ingredient as also a mental ingredient. Reading of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court on this aspect. I am in these circumstances satisfied that the challenge raised on this ground also deserves to be upheld." 5. Civil Revision Petition Nos.579 and 580 of 2002 filed by the respondents were dismissed by the Division Bench of the High Court vide judgement dated 18.12.2006. The High Court agreed with the Appellate Authority that the evidence produced by the landlord was not sufficient for recording a finding that the tenant had ceased to occupy the premises for a continuous period of six months without reasonable cause. 6. During the pendency of the revisions before the High Court, the respondents filed fresh rent control petitions which came to be registered as RCP Nos.109 of 2002 and 38 of 2003 for eviction of the appellant under Section 11(2)(b), 11(3), 11(4)(i) and 11(4)(v). This time, the respondents pleaded that the appellant herein has ceased to occupy the premises since September, 2001 without any reasonable cause. Both the petitions were allowed by the Rent Control Court vide order dated 11.2.2004, which was confirmed by the Appellate Authority by dismissing the appeals preferred by the appellant. However, Civil Revision Petition No.368 of 2005 filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er considering the pleadings and evidence of the parties, the Rent Control Court held that the petitions filed by the respondents were not barred by res judicata and Section 15 of the 1965 Act cannot be invoked for denying relief to them because two sets of rent control petitions were based on different causes. However, the respondents' plea that the appellant was in arrears of rent was rejected on the ground that no evidence had been produced by them to prove the same. The Rent Control Court then considered the question whether the appellant had ceased to occupy the suit premises since September, 2001 without reasonable cause and answered the same in affirmative. The Rent Control Court referred to the evidence produced by the parties including the reports Exhibits C1 and C2 produced by Advocate Commissioners PW2 and PW3 and recorded the following observations: "(i) From Ext.C1 report filed by PW2 it can be seen that the two entrance gates on the northern side of the petition schedule property in O.S. 109/02 is found rusted and closed. The boundary fencing on the northern side is found damaged. &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petition schedule building were not having electricity supply. It is also noted that the four iron gates provided for the compound were covered with dust and rust due to non use. (vii) Even though the condition of the petition schedule buildings happened to be as noted by PW2 and PW3 to a limited extent to non-maintenance and repairs it cannot be found that it happened only due to non-maintenance and repairs. (viii) The calendars for the year 2001 noted by PW3 inside the petition schedule building in RCP No.38/03 and the notice dated 01.10.2001 affixed at the front shutter of the same building clearly shows that both the petition schedule buildings were not been opening from 1.10.2001 towards till the inspection date. Since the petition schedule buildings were not opened since September, 2001 the inability of the Petitioner to carry out the repairs and maintenance also is to be looked into." (emphasis supplied) 10. The Rent Control Court then considered the plea of the appellant that on account of pendency of the proceedings under the 1985 Act, the staff streng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition schedule building due to BIFR and AAIFR proceedings. Ext.B9 is the order of AAIFR, New Delhi in appeal No.1/02 wherein the Respondent is the appellant. On perusal of Ext.B9 it can be seen that several reliefs and concessions were given to the Respondent company by the AAIFR. But as per ext.B9 no restriction is seen imposed on the work of respondent company all together or particularly in the schedule buildings at Cochin. As already observed respondents could not produce any of the mandatory prescribed registers such as stock register, day book, muster roll, attendance register wages register etc. to show that any business were being carried out in the petition schedule buildings even with minimum staff. Even it was specifically put to RW1 that due to the proceedings before BIFR and AAIFR, whether the board of directors was resolved to reduce the staff strength she answered that the staff were told not to come and they have agreed for the same. It is something unbelievable. RW1 has produced Ext.B13 series to B25 series invoices to show that they are conducting business to the scheduled property. But on going through ext.B13 series to ext.B25 series it cannot be found that thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e evidence produced by the parties and concurred with the Rent Control Court and the Appellate Authority that the respondents had succeeded in making out a case for eviction of the appellant under Section 11(4)(v). The High Court referred to the expression "reasonable cause" used in Section 11(4)(v), the judgment in Paulina Joseph v. Idukki District Wholesale Co-operative Consumer Stores Ltd. (2006) 1 KLT 603 and observed: "Interpreting the scope and meaning of "reasonable cause" provided in section 11(4)(v) of the Act a Division Bench of this Court in Paulina Joseph vs Idukki District Wholesale Co-operative Consumer Stores Ltd., (2006 (1) KLT 603) held that if there is a plausible explanation to the question why the business was not run in the premises continuously, it may be a relevant fact in considering whether there was reasonable cause for cessation of occupation. But it is held that existence of such reasonable cause depends on the facts and circumstances of each cases. It is further held that the occupation of the building depends on the purpose for which it is let and the purpose for which it is used. The nature of the business and the requirement of the physical presence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in the earlier round of litigation and this error was repeated by the Appellate Authority and the High Court while dismissing the appeals and revisions filed by the appellant. Shri Nariman argued that the finding recorded by the Rent Control Court and the Appellate Authority that the appellant had ceased to occupy the suit premises continuously for six months without reasonable cause was based on misreading of evidence and the High Court committed serious error by approving the same ignoring the finding recorded in the earlier round of litigation, which had become final. Learned senior counsel emphasized that due to pendency of proceedings under the 1985 Act, the appellant could not effectively use the suit premises, but that did not justify a conclusion that it had ceased to occupy the premises. He then submitted that the pendency of case under the 1985 Act was, by itself, sufficient for recording a finding that there was reasonable cause for the appellant to have ceased to occupy the suit premises. Shri Nariman invited our attention to order dated 3.3.2008 passed by AAIFR vide which the appeals filed against the order of the BIFR were dismissed and argued that the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Government or other public authority notified under this Act. Second proviso to Section 11(1) carves out another exception and lays down where the tenant denies the title of the landlord or claims right of permanent tenancy, the Rent Control Court shall decide whether the denial or claim is bonafide and if it records a finding to that effect, the landlord shall be entitled to sue for eviction of the tenant in a Civil Court and such court can pass a decree for eviction on any of the grounds enumerated in Section 11 even though the Court may find that such denial does not involve forfeiture of the lease or that the claim is unfounded. Section 11(4)(v) of the Act which has bearing on this case reads as under: "(1) to (3) xxx xxx xxx (4) A landlord may apply to the Rent Control Court for an order directing the tenant to put the landlord in possession of the building,- (i) to (iv) xxx xxx xxx (v) if the tenant ceases to occupy the buildin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for his having ceased to occupy the tenanted premises for a continuous period of 6 months. No strait- jacket formula can be evolved for determining as to what is the reasonable cause and each case is required to be decided keeping in view the nature of the lease, the purpose for which the premises are let out and the evidence of the parties. If the building, as defined in Section 2(1), is let out for industrial or commercial/business purpose and the same is not used for the said purpose continuously for a period of six months, the tenant cannot plead financial crunch as a ground to justify non occupation of the building unless cogent evidence is produced by him to prove that he could not carry on the industrial or commercial/business activity due to fiscal reasons which were beyond his control. If the tenant does not use the building for the purpose for which it is let out, he cannot be said to be occupying the building merely because he has put some furniture or articles or machinery under his lock and key. 19. At this stage, we may notice some precedents which throw some light on the true interpretation of the expressions "occupy" and "reasonable cause" used in Section 11(4)(v) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t remaining in occupation of the premises. Consistently with what has been mutually agreed upon, the tenant is expected to make useful use of the property and subject the tenancy premises to any permissible and useful activity by actually being there. To the landlord's plea of the tenant having ceased to occupy the premises it is no answer that the tenant has a right to possess the tenancy premises and he has continued in juridical possession thereof. The Act protects the tenants from eviction and enacts specifically the grounds on the availability whereof the tenant may be directed to be evicted. It is for the landlord to make out a ground for eviction. The burden of proof lies on him. However, the onus keeps shifting. Once the landlord has been able to show that the tenancy premises were not being used for the purpose for which they were let out and the tenant has discontinued such activities in the tenancy premises as would have required the tenant's actually being in the premises, the ground for eviction is made out. The availability of a reasonable cause for ceasing to occupy the premises would obviously be within the knowledge and, at times, within the exclusive knowl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to spend 24 hours in all weathers under his own roof for 365 days in the year. Clearly, for instance, the tenant of a London house, who spends his week-ends in the country, or his long vacation in Scotland, does not necessarily cease to be in occupation. Nevertheless, absence may be sufficiently prolonged or unintermittent to compel the inference, prima facie, of a cesser of possession or occupation. The question is one of fact and of degree. Assume an absence sufficiently prolonged to have this effect. The legal result seems to us to be as follows:-(1) The onus is then on the tenant to repel the presumption that his possession has ceased. (2) To repel it he must, at all events, establish a de facto intention on his part to return after his absence. (3) But we are of opinion that neither in principle nor on the authorities can this be enough. To suppose that he can absent himself for 5 or 10 years or more and retain possession and his protected status simply by proving an inward intention to return after so protracted an absence would be to frustrate the spirit and policy of the Acts as affirmed in Keeves v. Dean (1) and Skinner v. Geary (3), (4) Notwithstanding an absence so prot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to order passed by Chagla, C.J. in Civil Revision Application No.1527/1953 decided on July 30, 1954 and observed: "As observed by Chagla, C. J., in the above case, physical possession by a tenant himself was not necessary. Physical possession by other members of the family also is not necessary if there was reasonable cause for their remaining absent from the premises. The question is one of fact and degree. If there is evidence on record to show that the tenant had something more than a vague wish to return and that he had a real hope coupled with the practicable possibility of its fulfilment within a reasonable time, it cannot be said that he had no reasonable cause for not using the premises. In every case it is the duty of the Court to satisfy itself that the tenant had no reasonable cause. Absence may be sufficiently prolonged or unintermittent to compel the inference prima facie of a cesser of occupation. The onus is on the tenant in such a case to repel the presumption and to establish that his possession had not ceased or that he had ceased to occupy on account of reasonable cause. In my judgment, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; "The word "occupy" occurring in S. 11(4)(v) has got different meaning in different context. The meaning of the word "occupy" in the context of S. 11 (4)(v) has to be understood in the light of the object and purpose of the Rent Control Act in mind. The rent control legislation is intended to give protection to the tenant, so that there will not be interference with the user of the tenanted premises during the currency of the tenancy. Landlord cannot disturb the possession and enjoyment of the tenanted premises. Legislature has guardedly used the expression "occupy" in S.1l (4)(v) instead of "possession". Occupy in certain context indicates mere physical presence, but in other context actual enjoyment. Occupation includes possession as its primary element, and also includes "enjoyment". The word "occupy" sometimes indicates legal possession in the technical sense; at other times mere physical presence. We have to examine the question whether mere "physical possession" would satisfy the word "occupy" within the meaning of S.11 (4)(v) of the Act. In our view mere physical possession of premises would not satisfy the meaning of "occupa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rged the burden and then the onus has shifted to the tenant and the tenant could not establish that he has not ceased to occupy the premises and even if there is cessation that was with reasonable cause." 26. In Paulina Joseph v. Idukki District Wholesale Co-operative Consumer Stores Ltd. (supra), the Division Bench of the High Court referred to the dictionary meaning of the word "reasonable" and observed: "The question whether the tenant ceases to occupy the building continuously for six months is primarily a question of fact to be determined with reference to the facts available in each case. The scope of "occupation of the building" depends on the purpose for which the building is let and the purpose for which it is used. The nature of the business and the requirement of the physical presence or otherwise of the tenant in the building for the conduct of the business is a relevant fact. No straight jacket formula can be evolved in the matter of proof of cessation of occupation within the meaning of Section 11(4)(v) of the Act. This intention of the tenant, though not conclusive as such has also relevance in dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingle Judge of this Court in the decision report in Abbas v. Sankaran Namboodiri (1993 (1) KLT 76) while examining the question held that, the word 'occupation' is used to denote the tenant's actual physical use of the building either by himself or through his agents or employees and legal possession is not sufficient. It was held that, "however, if a landlord succeeds in proving that his tenant did not occupy the building almost near the period fixed in Section 11(4)(v) of the Act it may help the court to presume that there could have been cessation of occupation for the statutory period. Such background presumption is not anathematic to the law of evidence". In para.7 it was observed that, "be that as it may, burden is on the landlord to prove that the tenant ceased to occupy the building for six months. But it is hard to expect a landlord to prove the precise during which his tenant ceased to occupy the building. However, if the court is satisfied on the evidence and/or with the aid of presumptions that the tenant did not occupy the building for such length of time as would cover the statutory period, then the burden would shift to the tenant to show that he had reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme financial crisis, the management had kept the business premises open for operation till 1999. In the second round, the appellant did not adduce any evidence worth the name to show that the premises were kept open or used from September, 2001 onwards. The Rent Controller took cognizance of the notice fixed on the front shutter of the building by A.K. Agarwal on 1.10.2001 that the company is a sick industrial company under the 1985 Act and operation has been suspended with effect from 1.10.2001; that no activity had been done in the premises with effect from 1.10.2001 and no evidence was produced to show attendance of the staff, payment of salary to the employees, payment of electricity bills from September, 2001 or that any commercial transaction was done from the suit premises. It is, thus, evident that even though the ground of eviction in the two sets of petitions was similar, the same were based on different causes. Therefore, the evidence produced by the parties in the second round was rightly treated as sufficient by the Rent Control Court and the Appellate Authority for recording a finding that the appellant had ceased to occupy the suit premises continuously for six mont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asehold right of the appellant-company in the premises leased out to it is property and since the eviction proceedings would result in the appellant-company being deprived of the said property, the said proceedings would be covered by category (2). We are unable to agree. The second category contemplates proceedings for execution, distress or the like against any other properties of the industrial company. The words `or the like' have to be construed with reference to the preceding words, namely, `for execution, distress' which means that the proceedings which are contemplated in this category are proceedings whereby recovery of dues is sought to be made by way of execution, distress or similar proceedings against the property of the company. Proceedings for eviction instituted by a landlord against a tenant who happens to be a sick industrial company, cannot, in our opinion, be regarded as falling in this category. We may, in this context, point out that, as indicated in the Preamble, the Act has been enacted to make special provisions with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determinatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the consent of the Board, but as we look at it the filing of an eviction petition on the ground of non-payment of rent cannot be regarded as filing of a suit for recovery of money. If a tenant does not pay the rent, then the protection which is given by the Rent Control Act against his eviction is taken away and with the non-payment of rent order of eviction may be passed. It may be possible that in view of the provisions of Section 22, the trial court may not be in a position to pass a decree for the payment of rent but when an application under Section 11(4) is filed, the trial court in effect gives an opportunity to the tenant to pay the rent failing which the consequences provided for in the sub-section would follow. An application under Section 11(4), or under any other similar provision, cannot, in our opinion, be regarded as being akin to a suit for recovery of money." (emphasis supplied) The same view was reiterated in Carona Ltd. v. Parvathy Swaminathan and Sons (2007) 8 SCC 559. 32. We shall now examine whether pendency of the proceedings under the 1985 Act, which implies that the appellant was facing financial difficulty in conducting its business constituted reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
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