Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 8
CASE NO.:
Appeal (civil) 3345-3349 of 1998
PETITIONER:
R.V.E. VENKATACHALA GOUNDER
Vs.
RESPONDENT:
VENKATESHA GUPTA & ORS.
DATE OF JUDGMENT: 09/04/2002
BENCH:
R.C. Lahoti & P. Venkatarama Reddi
JUDGMENT:
R.C. Lahoti, J.
The suit property consists of a building situated on
Easvarankoil Street of Tirupur city in the State of Tamil Nadu. There
are six tenants in the building and the portions in their occupation are
identified respectively as door Nos. 64, 64A, 64B, 64C, 64D and 64E.
Six petitions for evicting the tenants were filed before the Controller
on the ground available under clause (b) of sub-section (1) of Section
14 of The Tamil Nadu Building (Lease and Rent Control Act) 1960
(hereinafter the ’Act’, for short) alleging that the building was bona
fide required by the landlord for the immediate purpose of
demolishing it and such demolition is to be made for the purpose of
erecting a new building on the site of the building sought to be
demolished. The tenants resisted the proceedings for eviction. One of
the pleas taken by them was that the land, on which the building
stood, belonged to Veeraragava Perumal and Visweswara temple and,
therefore, the question of the landlord reconstructing any building
over the land did not arise. However, this plea did not find favour
with the Controller and, at the stage of appeal, the plea was
specifically given up by the tenants. Similarly the landlord had sought
for eviction of the tenants also on the ground of the tenants being
wilful defaulters but that plea was given up by the landlord. What
survives for consideration is, therefore, solely the availability of
ground for eviction under Section 14(1)(b). The Controller negated
the availability of this ground for eviction. The landlord preferred six
appeals which were allowed and, in supersession of the order of the
Controller, the petitions for eviction were allowed and the tenants
were directed to be evicted. Out of six tenants, one has submitted to
the order of the appellate authority. Five tenants preferred civil
revision petitions before the High Court. The High Court has re-
appreciated the evidence and recorded a finding that the requirement
of the landlord could not be said to be bona fide and, by a common
order, directed the eviction petitions to be dismissed. The landlord
has filed these five appeals by special leave.
Sub-Section (1) and (2) of Section 14 and Sections 15 & 16 of
the Act, relevant for our purpose, read as under:-
"14. Recovery of possession by landlord
for repairs or for reconstruction.__
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 8
(1) Notwithstanding anything contained in
this Act, but subject to the provisions of sections
12 and 13, on an application made by a landlord,
the Controller shall, if he is satisfied__
(a) that the building is bona fide required by the
landlord for carrying out repairs which cannot be
carried out without the building being vacated; or
(b) that the building is bona fide required by the
landlord for the immediate purpose of demolishing
it and such demolition is to be made for the
purpose of erection a new building on the site of
the building sought to be demolished, pass an
order directing the tenant to deliver possession of
the building to the landlord before a specified date.
(2) No order directing the tenant to
deliver possession of the building under this
section shall be passed__
(a) on the ground specified in clause (a) of sub-
section (1) unless the landlord gives an
undertaking that the building shall, on completion
of the repairs, be offered to the tenant, who
delivered possession in pursuance of an order
under sub-section (1) for his reoccupation before
the expiry of three months from the date of
recovery of possession by the landlord, or before
the expiry of such further period as the Controller
may, for reasons to be recorded in writing, allow;
or
(b) on the ground specified in clause (b) of sub-
section (1), unless the landlord gives an
undertaking that the work of demolishing any
material portion of the building shall be
substantially commenced by him not later than one
month and shall be completed before the expiry of
three months from the date he recovers possession
of the entire building or before the expiry of such
further period as the Controller may, for reasons to
be recorded in writing allow.
xxx xxx xxx xxx
xxx xxx xxx xxx
15. Tenant to re-occupy after repairs.__
(1) Where the landlord recovers possession
under clause (a) of sub-section (1) of Section 14,
he shall, within two months before the date on
which the work of repairs is likely to be
completed, give notice to the tenant of the date on
which the said work will be completed. Within
fifteen days from the date of receipt of such notice,
the tenant shall intimate to the landlord his
acceptance of the building offered for his re-
occupation and if the tenant gives such intimation,
the landlord shall within thirty days from the date
of completion of the work of repair put the tenant
in possession of the building on the original terms
and conditions. If the tenant fails to give such
intimation, his right to re-occupy the building shall
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 8
terminate.
(2) If after the tenant has delivered
possession, the landlord fails to commence the
work of repairs within one month from the date of
such delivery, or fails to complete the work before
the expiry of three months from the date of such
delivery, or before the expiry of the further period
allowed under clause (a) of sub-section (2) of
section 14 or having completed the work fails to
put the tenant in possession of the building in
accordance with the provision of sub-section(1),
the Controller may, on the application of the tenant
made within thirty days from the date of such
failure, order the landlord to put the tenant in
possession of the building on the original terms
and conditions; and on such order being made, the
landlord and any person who may be in occupation
shall put the tenant in possession of the building.
16. Tenants to occupy if the building is
not demolished.__
(1) Where an order directing delivery of
possession has been passed by the Controller under
clause (b) of sub-section (1) of section 14 and the
work of demolishing any material portion of the
building has not been substantially commenced by
the landlord within the period of one month in
accordance with his undertaking under clause (b)
of sub-section (2) of section 14, the tenant may
give the landlord notice of his intention to occupy
the building the possession of which he delivered.
If within fifteen days from the date of receipt of
such notice, the landlord does not put him in
possession of buildings on the original terms and
conditions, the tenant may make an application to
the Controller within eight weeks of the date on
which he put the landlord in possession of the
building. The Controller shall order the landlord
to put the tenant in possession of the building on
the original terms and conditions.
(2) Where in a pursuance of an order passed
by the Controller under clause (b) of sub-section
(1) of section 14, any building is totally
demolished and a new building is erected in its
place, all the provisions of this Act shall cease to
apply to such new building for a period of five
years from the date on which the construction of
such new building is completed and notified to the
local authority concerned."
Before we may proceed to discuss the submissions on question
of law made by the learned counsel for the parties, we may briefly set
out the relevant facts to lay down the factual matrix on which the
submissions, on question of law, would stand. The building is
situated in the city of Tirupur which, as the appellate authority has
noted, is an industrial town and so far as the cloth business is
concerned the city is top-city of the State. Evidence was recorded
before the Controller in the year 1989. At that time the building was
30 years old. According to the landlord, the building was situated in
a business locality but was in a bad condition. The landlord wanted
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 8
to reconstruct the building so as to augment his earnings. The
condition of the building, the plans for reconstruction submitted to the
Municipality and approved by it, are the facts stated in the notice,
served on the tenants, prior to invitation of proceedings for eviction.
According to the landlord, the building would be demolished
immediately and on godown being constructed at the site the landlord
would be able to earn rent at the rate of Rs.1.25p. per sq. feet. The
landlord also stated that a portion of the newly constructed building
would be utilized for the personal use and occupation of the landlord
and if any portion was left out as being in excess of the personal
requirement of the landlord then the landlord was willing to let out the
same to the tenants at the rate of Rs.1.50p. per sq. feet. The building
proposed to be constructed was a double-storey building on which an
amount of Rs.6 lakhs was likely to be spent. The landlord tendered
documentary evidence showing that approximately an amount of Rs.9
lakhs was available with the landlord in the bank accounts. One of the
tenants, namely Venkatesa Guptha, RW1 admitted in his deposition
that the suit premises were situated in an important business locality
of Tirupur. The building was constructed with stones, bricks and
mortar and was not required to be demolished. However, during
cross-examination, he admitted that the front portion of the building
was covered with cement sheets and back portion was covered with
tiles. There was also some un-constructed portion of the property
lying at the back. Subbarayan, RW3 admitted that though the
building was not dilapidated and damaged, yet, if a building on all the
land was constructed, then it would fetch more rental income. The
tenants offered that even without new construction they were prepared
to pay rent at the rate of Rs.1.25p. per sq. feet in the present condition
of the building.
Thus, on a broad conspectus, the situation which emerges is
that out of the total property of the landlord, part is lying
unconstructed and part is constructed. The constructed portion is
covered with asbestos sheets or tiles used as roof. The property is
valuable as situated in busy business locality. The building was about
30 years old by the year 1989. If reconstructed, obviously the
building would be double-storeyed, a modern building of cement
concrete and would admittedly fetch more rental income apart from
satisfying some personal need of the landlord. The appellate authority
considered all the evidence and relevant circumstances of the case and
arrived at a finding that the requirement of the landlord was bona fide.
These findings have been reversed by the High Court mainly on the
ground, as the judgment of the High Court reveals, that as the tenants
were prepared to pay Rs.1.25p. per sq. feet by way of rent in respect
of the existing accommodation, the question of reconstructing the
building for the purpose of augmenting earnings of the landlord, and
that too after spending Rs.6 lakhs, did not arise. The High Court
observed that merely because the landlord was having sufficient funds
and had got the plans of proposed reconstruction approved, the Court
could not order eviction.
In this Court, it is submitted by the learned counsel for the
landlord-appellant that a finding on the question of bona fides of the
landlord is basically a finding of fact which, having been arrived at by
the appellate authority on the consideration of all the relevant facts
and circumstances of the case, was not liable to be interfered with in
exercise of revisional jurisdiction of the High Court. The learned
counsel pointed out those relevant aspects of the case which were not
adverted to by the High Court, rendering the judgment of the High
Court infirm, with which we will deal with a little later. The learned
counsel for the respondents-tenants submitted, on the other hand, that
the real purpose of the landlord is to get rid of the tenants and not to
reconstruct the property. The learned counsel pointed out a serious
lacuna in the Act and submitted that after securing orders of eviction
if the landlord demolishes the property but does not commence
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 8
reconstruction, the tenants are left without any remedy and therefore
the Court should carefully and cautiously examine the bona fides of
the landlord and should not order eviction unless fully satisfied of the
need for reconstruction and its bona fides. It was lastly submitted that
the condition of the building was one of the relevant and weighty -
factors and in as much as the building was neither dilapidated nor was
so old as to need immediately a demolition, the eviction could not
have been ordered. The landlord wanted to earn more and if such
expected earnings are secured by retaining the premises in the present
condition, in view of the offer made by the tenants, the question of
reconstruction being allowed does not arise at all.
In Prabhakaran Nair & Ors. Vs. State of Tamil Nadu & Ors.,
(1987) 4 SCC 238, constitutional validity of Section 14(1)(b) read
with Section 14(2)(b) was challenged on the ground that the provision
is violative of Article 14 of the Constitution because it does not
provide for re-entry of the tenant in the reconstructed premises as has
been done in several other State Legislations. It was also submitted
that while the premises, having been vacated for the purpose of repairs
under Section 14(2)(a), are available for re-occupation by the
dislodged tenants, a similar provision is not to be found for protecting
the tenants evicted for the purpose of reconstruction under Section
14(2)(b) and this also renders the latter provision unreasonable. The
challenge was turned down by this Court. This Court held inter alia
that in the case of demolition and reconstruction, the landlord has to
substantially commence the work of demolition in material portion of
the building not later than one month and the entire demolition work
to be completed before the expiry of three months from the date he
recovers possession of the entire building. This is a reasonable
guarantee for the bona fides of the landlord. Vide paras 12 and 13, the
Court held as under:-
"12. It has further to be borne in mind that
after such demolition the reconstruction of a new
building on the same site is bound to take time and
such time depends upon the nature of the building
to be erected and it might take years it was argued.
During that period a tenant was bound to have
found some other suitable alternative
accommodation; on the other hand in the case of a
building for repairs, a tenant may arrange for
temporary accommodation for a few months and
return back to the building. Therefore provision
for re-induction in the case of repairs and absence
of such a provision in the case of demolition and
reconstruction is quite understandable and rational.
13. It has to be borne in mind that it is not
practicable and would be anomalous to expect a
landlord to take back a tenant after a long lapse of
time during which time the tenant must necessarily
have found some suitable accommodation
elsewhere. This is the true purpose behind Section
14(1)(b) read with Section 14(2)(b). In the
aforesaid view of the matter, we are unable to
accept the submission that in providing for re-
induction of the tenant in case of repairs and not
providing for such re-induction in case of
reconstruction, there is any unreasonable and
irrational classification without any basis."
During the course of its judgment the Court further observed
that the courts are not concerned with the wisdom of the Legislature
and the provision contains sufficient inbuilt guidelines to save it from
being rendered unconstitutional. While protecting the tenants from
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 8
unreasonable eviction, the landlords should not be discouraged from
constructing new buildings because in the ultimate result it would
augment the housing wealth of the nation which in turn would benefit
the tenants and protect their larger interest by reducing the shortage of
housing.
A three-Judge Bench in the case of P. Orr & Sons (P) Ltd. Vs.
Associated Publishers (Madras) Limited, (1991) 1 SCC 301,
considered Section 14(1)(b) of the Act and the underlying legislative
scheme and held that in order to make out a case for eviction under
Section 14(1)(b), demolition for the purpose of erection of a new
building must be the direct, immediate, genuine and real requirement
of the landlord. In the opinion of the Court, the bona fide character of
the requirement is proved by the appropriateness of time and the
absence of any ulterior or irrelevant consideration separating the
requirement from the statutory or permitted purpose. The direct and
immediate nexus between these two elements is proved by the
condition of the building and other relevant circumstances. What is
the degree of urgency warranted by what extent of damage to the
building that makes the requirement directly and immediately
connected with the statutory purpose, is a question of fact which must
be decided in each case on evidence. Absence of any need for
urgency by reason of the strong and sound condition of the building
will negative the bona fide character of the requirement and as such a
building which is sound and safe does not qualify for demolition in
terms of Section 14(1)(b). Any such building falls totally outside its
ambit.
Thus, in the opinion of three-Judges Bench in the above-noted
case, the determinative factor was the condition of the building though
in addition, other factors could be taken into consideration.
The three-Judges Bench decision in P. Orr & Sons came up for
the consideration of five-Judges Bench in Vijay Singh & Ors. Vs.
Vijayalakshmi Ammal, (1996) 6 SCC 475. The Constitution Bench
lamented the Legislature having not employed clear and specific
expression to make their intention clearly understandable. However,
keeping in view the two pronged purpose of the Act __ to protect the
tenants from eviction at the mere will and desire of the landlord and at
the same time to fulfil the legislative intent of securing eviction for the
"immediate purpose for demolishing", the Constitution Bench held
that the said expression could not be linked only with the dilapidated
and dangerous condition of the building. Section 16 was a pointer to
the legislative intent; if only such buildings which were dilapidated
and dangerous for human habitation were intended to be covered then
provision would not have been made in sub-section (1) of Section 16
for re-induction of the tenant in such a building on original terms and
conditions if the building was not demolished. On the contrary, there
being no provision for re-induction of the tenant in the newly
constructed building and, further, such newly constructed building
having been exempted from the provision of the Act for a period of
five years from the date of completion of such new building having
been notified to the local authority concerned, it is a clear indication
that the framers of the Act desired to encourage erection of new
building in place of the building which had been totally demolished
on the basis of the order passed by the Controller under Section
14(1)(b). The Constitution Bench summed up the view of the law in
the following words:-
"For granting permission under Section
14(1)(b) the Rent Controller is expected to
consider all relevant materials for recording a
finding whether the requirement of the landlord for
demolition of the building and erection of a new
building on the same site is bona fide or not. For
recording a finding that requirement for demolition
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 8
was bona fide, the Rent Controller has to take into
account: (1) bona fide intention of the landlord far
from the sole object only to get rid of the tenants;
(2) the age and condition of the building; (3) the
financial position of the landlord to demolish and
erect a new building according to the statutory
requirements of the Act. These are some of the
illustrative factors which have to be taken into
consideration before an order is passed under
Section 14(1)(b). No court can fix any limit in
respect of the age and condition of the building.
That factor has to be taken into consideration along
with other factors and then a conclusion one way
or the other has to be arrived at by the Rent
Controller."
We may refer to two decisions of Madras High Court. In S.
Raju and others Vs. K. Nathamani, 1998 (3) LW 214, the
Constitution Bench decision has been followed and it has been held
that when new buildings with modern amenities have come up in that
locality, naturally the building in question may become unsuitable to
the surroundings and a liability, in its present condition, to the
landlord. Keeping the building in the same condition will amount to
asking the landlord to shoulder the burden for ever. Tenants may be
satisfied with the present state of the building since they have to pay
only a nominal rent but the Rent Control Legislation, beneficial to the
landlord and the tenant both, should be interpreted in that way. For
the purpose of proving his bona fides the landlord need only show that
he has got the capacity to raise the necessary funds. In A.N.
Srinivasa Thevar Vs. Sundarambal alias Prema W/o.
Chandrakumar, 1995 (2) LW 14, even before the decision by
Constitution Bench in Vijay Singh’s case was available, it was held in
the light of the decision in P. Orr & Sons that the availability of the
following factors was sufficient to make out a case of bona fide
requirement under Section 14(1)(b): "(a) Capacity of the landlord to
demolish and to reconstruct is undisputed and also proved
satisfactorily; (b) The size of the existing building occupies only one
third of the site, leaving two third behind vacant and unutilized; (c)
Demand for additional space: The demised premises is situated in a
busy locality. Therefore, there is a great demand for additional space
in the locality which could be met by demolishing the existing small
building and putting up a larger building providing for future
development vertically also, by building pucca terraced building; (d)
The economic advantage: A modern construction of a larger building
shall certainly yield better revenue and also appreciate in value, when
compared to the asbestos sheet roofed old building." In that case, it
was observed that the existing building was an old, out-model
asbestos sheet building proposed to be replaced with better and
modern building which would provide for better quality
accommodation to the needs of the present days as the preservation of
such building in a busy locality of a town shall not only be an eyesore
but also against the souring public demand for additional space.
Viewed from the angle of general interest of the public which,
according to the decision in P. Orr & Sons is one of the
considerations, it was observed that a big site should yield to a larger
modern building with an increased and enlarged accommodation
having better facilities to solve the ever increasing demand for more
space. Stalling growth and development for the sake of one tenant
who is in occupation of an old model building constructed with mud
and mortar and asbestos sheets occupying only one third of the site
was held to be not conducive to public interest. We approve the
statement of law and the approach adopted by Madras High Court in
both the abovesaid decisions. The structural and physical features and
the nature of the construction of the building cannot be ignored. Even
in P. Orr & Sons, this Court was of opinion that various
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 8
circumstances, such as the capacity of the landlord, size of the
existing building, the demand for additional space, the condition of
the place, the economic advantage and other factors, justifying
investment of capital on reconstruction may be taken into account by
the concerned authorities, while considering the requirement for
reconstruction of the building as the essential and overriding
consideration in the general interest of the public and for the
protection of the tenant from unreasonable eviction.
Reverting back to the case at hand, we find that the six tenants
are not in full occupation of the entire space available. The landlord
proposes to construct a new and modern building in busy commercial
locality of a rising city. The landlord requires a part of the newly
constructed building for his own personal use and such part of the
newly constructed building as would be in excess of his own
requirement he is willing to let out at current rate of rent to his tenants
which would obviously augment his earnings. The newly constructed
double storeyed building, would certainly provide much more total
accommodation than what is available. In such circumstances the
offer of the tenant that they are prepared to pay the rent at the current
rate, the one which the landlord expects on reconstruction, becomes
irrelevant and should not have prevailed with the High Court.
For the foregoing reasons, we are of the opinion that the High
Court ought not to have interfered with the decision of the appellate
authority. The appeals are allowed. Judgment of the High Court is
set aside and that of the appellate authority restored. However, in
view of the time that has already been lost in the litigation and to
protect the interest of the tenants and certainly to allay their fears, it is
directed that the executing Court shall, before directing the tenants
to be evicted and possession being given to the landlord, direct the
landlord to file plans of proposed construction, duly approved by the
local authority, and give an undertaking in terms of Section 14(2)(b)
of the Act. No order as to costs.
........J
(R.C. LAHOTI)
..J.
(P.VENKATARAMA REDDI)
April 9, 2002.