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Tuesday, July 29, 2014

Se.106, 108 B (e) and sec.114 of T.P.Act - Destroy of leased property - No Doctrine of frustration of contract - Permanent lease renewable from time to time - Purchaser of leased property - when tried to demolish the leased building - Tenant filed suit for injunction - pending suit , he demolished the building step by step - suit amended for Mandatory injunction - all lower courts dismissed the suit - Apex court held that what the purchaser purchased is only title in ownership but not lease hold rights and as such with out restoring to sec.106 of T.P. Act , he can not evict the tenant nor do any acts against the rights and liabilities of lease agreement - as the purchaser demolished the building pending suit , he is not entitled for the benefit of sec.108 B (e) and much more bared from claiming any benefits under it's proviso and as there is no possiblity to restore the possession directed to pay compensation of Rs.20 lakhs and further held that the law laid in T. Lakshmipathi (supra) are correct and the law laid down in Vannattankandy Ibrayi not correct and as such over ruled the same and further held that since the building was destroyed - civil court has got jurisdiction = CIVIL APPEAL NO. 127 OF 2007 M/S SHAHA RATANSI KHIMJI & SONS … APPELLANTS VERSUS PROPOSED KUMBHAR SONS HOTEL P. LTD. & ORS. … RESPONDENTS = 2014 – July. Part – http://judis.nic.in/supremecourt/filename=41760

    Se.106, 108 B (e) and sec.114 of T.P.Act - Destroy of leased property - No Doctrine of frustration of contract - long standing lease renewed from time to time and in continuation - Purchaser of leased property - when tried to demolish the leased building - Tenant filed suit for injunction - pending suit , he demolished the building step by step - suit amended for Mandatory injunction - all lower courts dismissed the suit - Apex court held that what the purchaser purchased is only title in ownership but not lease hold rights and as such with out restoring to sec.106 of T.P. Act , he can not evict the tenant nor do any acts against the rights and liabilities of lease agreement - as the purchaser demolished the building pending suit , he is not entitled for the benefit of sec.108 B (e) and much more bared from claiming any benefits under it's proviso and as there is no possiblity to restore the possession directed to pay compensation of Rs.20 lakhs and further held that the law laid in T. Lakshmipathi (supra) are correct and the law laid down in  Vannattankandy Ibrayi  not correct and as such over ruled the same  and further held that since the building was destroyed - civil court has got jurisdiction =

When the matter came before this Court, vide order dated 5th  January,
2007, this Court referred the matter to a Bench of three  Judges.  The  said
order reads as under:
“Apparently there seems to be inconsistency in the view taken by this  Court
in Vannattankandy Ibrayi Vs.  Kunhabdulla  Hajee  [(2001)  1  SCC  564]  and
T.Lakshmipathi & Ors. Vs.  R.Nithyananda Reddy & Ors. [(2003) 5 SCC 150].

In the case of Vannattankandy Ibrayi Vs. Kunhabdulla Hajee,  (2001)  1
SCC 564,
this Court formulated two questions for consideration:
 “(a) Whether the tenancy in respect of the premises governed by the  Kerala
Buildings  (Lease  and  Rent  Control)  Act  (hereinafter  referred  to   as
[pic]“the State Rent Act”) is extinguished by destruction  of  the  subject-
matter of tenancy i.e. the premises by natural calamities, and

(b) On the destruction of property whether the civil court has  jurisdiction
to entertain and try the suit for recovery of possession of land brought  by
the landlord.”

        Both questions were answered in the affirmative.

 In Lakshmipathi & Ors. Vs.  R.Nithyananda Reddy & Ors.  (2003)  5  SCC
150,
this Court held that lease of a building includes, the  land  on  which
the building stands. So even if the building  is  destroyed  or  demolished,
the lease is not determined as long as the  land  beneath  it  continues  to
exist.   Doctrine  of  frustration  cannot  be  invoked  on  destruction  or
demolition of a building under lease where not only privity of contract  but
privity of estate is also created.=

Apex court held that
It has been further opined that once a tenancy is created  in  respect
of a building standing on the land it is the building  and  the  land  which
are both components of the subject-matter of demise and the  destruction  of
the building alone does not determine the tenancy when  the  land  which  is
the site of the building continues to exist.   This  interpretation,  as  we
find, is in accord with Section 108 of the Act. It is  reflectible  that  in
Vannattankandy Ibrayi’s case, the two-Judge Bench observed that  the  rights
stand extinguished as on  the  distinction  of  the  demise,  for  there  is
destruction of the superstructure and  in  its  non-existence  there  is  no
subject matter. Thus, the land has been kept out of the concept  of  subject
matter.  In our considered opinion, the Court in the  said  case  failed  to
appreciate that there are two categories of subject-matters, combined  in  a
singular capsule, which is the essence of provision under  the  Transfer  of
Property  Act  and  not  restricted  to  a  singular  one,  that   is,   the
superstructure.  In T. Lakshmipathi (supra) the Court took note of the  fact
that the land and superstructure standing on it as a singular component  for
the purpose of tenancy.   It  is  in  tune  with  the  statutory  provision.
Therefore, we agree with the proposition stated therein to the  affect  that
“in the event of the tenancy having been created in respect  of  a  building
standing on the land, it is  the  building  and  the  land  which  are  both
components of the subject-matter  of  demise  and  the  destruction  of  the
building alone does not determine the tenancy when the land  which  was  the
site of the building  continues  to  exist”.   On  the  touchstone  of  this
analysis,  we   respectfully   opine   that   the   decision   rendered   in
Vannattankandy Ibrayi (supra) does not correctly lay down  the  law  and  it
is, accordingly, overruled.

in this case - the purchaser of the property destroyed the rented go down pending suit by stating that it was destroyed due to natural climates and resisted the suit for injunction filed by lessor - trial court , appellant court and High court dismissed the suit - Now this case before Apex court=

 In or about 1961-62, the appellant firm took the godown over the  suit
property on rent from Ujjwal Lahoti;  Since  then  the  appellant  has  been
continuously paying rent to Ujjwal Lahoti  and  storing  its  goods  in  the
godown. The appellant was using the  access  on  the  eastern  side  of  the
godown for approaching the municipal road and in bringing its goods  to  the
godown.=

the plea of appellant is that 
even  after
the destruction of the tenanted premises, the  tenancy  is  not  determined,
and hence the appellant is entitled to the benefit of Section  108(B)(e)  of
the Transfer of Property Act, 1882  (hereinafter  referred  to  as  ‘the  TP
Act’). It was contended that even if the  tenanted  premises  is  completely
destroyed and  renders  the tenanted premises substantially  or  permanently
unfit for the purpose for which it was let out, the lease subsists till  the
tenant terminates the lease.
 Section 108 of the T.P. Act  explains  the  rights  &  liabilities  of
lessor and lessee and  provisions  of  the  said  section  relevant  to  the
present case i.e. Section 108(B)(e) reads as under:

“108. Rights and liabilities of lessor or lessee. –  In  the  absence  of  a
contract or local usage to the contrary,   the  lessor  and  the  lessee  of
immovable property,  as  against  one  another,  respectively,  possess  the
rights and are subject to the   liabilities  mentioned  in  the  rules  next
following, or such of them as are applicable to the      property leased:-

Rights and Liabilities of the Lessor

x x x x x

Rights and liabilities of the Lessee
   (e) If by fire, tempest or flood, or violence of any army or  of  a  mob,
or other irresistible force, any material part of  the  property  be  wholly
destroyed or rendered substantially and permanently unfit for  the  purposes
for which it was let, the lease shall, at  the  option  or  the  lessee,  be
void:
Provided that, if the injury be occasioned by the wrongful  act  or  default
of the lessee, he shall not be entitled to avail himself of the  benefit  of
this provision;”

Case facts
 In the present  case,  it  is  not  in  dispute  that  the  respondent
purchased the lessor’s interest. The lease  continued  even  thereafter  and
did not extinguish.  The lease was subsisting when the shares  of  the  land
were purchased by the respondent. But the interest of  the  lessee  was  not
purchased by the respondent.  What has been purchased by the  respondent  is
the right and interest of ownership of the property.  The  interest  of  the
appellant as lessee has not been vested with the respondent.  Therefore,  we
are of the view that the tenancy of the appellant cannot  be  said  to  have
been determined consequent upon demolition and destruction of  the  tenanted
premises.
Apex court held that 
34.   In view of the fact and circumstances of the case, we  have  no  other
option but to set aside the impugned judgment and decree  dated  18th  July,
2006 passed by the High Court of Judicature at Bombay in Second  Appeal  No.
109 of 2006 and Judgment and decree dated 30th November, 2005 passed by  the
Addl. District Judge, Karad in RCA No. 86  of  2002.  However,  taking  into
consideration the fact that the appellant is not in possession of  the  suit
property  since  long,  we  are  not  inclined  to  direct  restoration   of
possession of  suit  property  to  the  appellant.  Instead  we  direct  the
respondent to pay a sum of Rs. 20,00,000/- (Rupees  Twenty  Lakhs  only)  in
favour of the appellant towards compensation  for  depriving  the  appellant
from enjoying the suit property, within two months, failing which  it  shall
be liable to pay interest @ 6% per annum from the date of the judgment.
35.   The appeal is allowed with the aforesaid  observation  and  direction.
No costs.
 Coming to the next question whether the civil  court  was  competent  to
entertain and  try  the  suit  filed  by  the  respondent  for  recovery  of
possession of the vacant land. 
As already stated above, the tenancy  in  the
present case was of a shop room which was let out to  the  tenant.  What  is
protected by the State Rent Act is the  occupation  of  the  tenant  in  the
superstructure.  The  subject-matter  of  tenancy  having  been   completely
destroyed the tenant can no longer use the said shop  and  in  fact  he  has
ceased to occupy the said shop. Section 11 of the State Rent  Act  does  not
provide for eviction of the tenant on  the  ground  of  destruction  of  the
building or the superstructure. Thus when  there  is  no  superstructure  in
existence the landlord cannot claim recovery of possession  of  vacant  site
under the State Rent Act. The only remedy available to  him  is  to  file  a
suit in a civil court for recovery of possession of land.  In  view  of  the
matter the civil court was competent to entertain and try the suit filed  by
the respondent landlord.”

2014 – July. Part – http://judis.nic.in/supremecourt/filename=41760


                                                              REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO.  127  OF 2007


M/S SHAHA RATANSI KHIMJI & SONS                  … APPELLANTS

                                   VERSUS

PROPOSED KUMBHAR SONS HOTEL P. LTD. & ORS.       … RESPONDENTS



                               J U D G M E N T


SUDHANSU JYOTI MUKHOPADHAYA, J.


This appeal is directed against the judgment and  decree  dated  18th  July,
2006 passed by the High Court of Judicature at Bombay in Second  Appeal  No.
109 of  2006.  By  the  impugned  judgment,  the  High  Court  affirmed  the
concurrent finding of the lower courts that the  appellant’s  tenancy  right
had lapsed and dismissed the second appeal.
2.    When the matter came before this Court, vide order dated 5th  January,
2007, this Court referred the matter to a Bench of three  Judges.  The  said
order reads as under:
“Apparently there seems to be inconsistency in the view taken by this  Court
in Vannattankandy Ibrayi Vs.  Kunhabdulla  Hajee  [(2001)  1  SCC  564]  and
T.Lakshmipathi & Ors. Vs.  R.Nithyananda Reddy & Ors. [(2003) 5 SCC 150].

Leave granted.
The matter shall be placed before a three Judge Bench.

Status quo shall be maintained in the meanwhile.”

3.    In the case of Vannattankandy Ibrayi Vs. Kunhabdulla Hajee,  (2001)  1
SCC 564, this Court formulated two questions for consideration:
 “(a) Whether the tenancy in respect of the premises governed by the  Kerala
Buildings  (Lease  and  Rent  Control)  Act  (hereinafter  referred  to   as
[pic]“the State Rent Act”) is extinguished by destruction  of  the  subject-
matter of tenancy i.e. the premises by natural calamities, and

(b) On the destruction of property whether the civil court has  jurisdiction
to entertain and try the suit for recovery of possession of land brought  by
the landlord.”

        Both questions were answered in the affirmative.

4.    In Lakshmipathi & Ors. Vs.  R.Nithyananda Reddy & Ors.  (2003)  5  SCC
150, this Court held that lease of a building includes, the  land  on  which
the building stands. So even if the building  is  destroyed  or  demolished,
the lease is not determined as long as the  land  beneath  it  continues  to
exist.   Doctrine  of  frustration  cannot  be  invoked  on  destruction  or
demolition of a building under lease where not only privity of contract  but
privity of estate is also created.
5.    In the present case, the suit property  comprises  of  Plot  No.  525,
Shaniwar Peth, Karad in District Satara, Maharashtra.  There  was  a  godown
on the southern side of the suit property.  The eastern portion of the  suit
property was open and there was a road admeasuring 10 to 12 ft.  from  which
the municipal road could be accessed.  On the northern portion of  the  suit
property, there was one RCC building.  The northern 11/16th portion  of  the
suit property belonged  to  one  Vinayak  Patwardhan  whereas  the  southern
5/16th share, on which the godown was constructed  belonged  to  one  Ujjwal
Lahoti.
6.    In or about 1961-62, the appellant firm took the godown over the  suit
property on rent from Ujjwal Lahoti;  Since  then  the  appellant  has  been
continuously paying rent to Ujjwal Lahoti  and  storing  its  goods  in  the
godown. The appellant was using the  access  on  the  eastern  side  of  the
godown for approaching the municipal road and in bringing its goods  to  the
godown.
7.    The case of  the  appellant  is  that  the  respondent  had  purchased
11/16th share of Vinayak Patwardhan in Plot No. 525 by two sale deeds  dated
9th September, 1971 and 21st January, 1978,  After purchasing the plot,  the
respondent demolished the  RCC  building  existing  over  the  property  and
started digging for basement for construction of  a  hotel.  Later,  on  4th
May, 1990, the respondent purchased the remaining 5/16th share  from  Ujjwal
Lahoti.
8.   Further case  of  the  appellant  is  that  the  respondent(s)  without
obtaining any requisite permission from the municipality started  digging  a
ditch towards the northern side wall of the suit property, thereby  exposing
the northern base of the godown to the vagaries of nature.  The  said  ditch
was nearly 13.6 ft. deep and exposed the entire base of the  godown.  During
the rainy season, water got accumulated in the said  ditch  and  the  entire
structure of godown was threatened. It weakened  the  foundation  of  godown
and subjected the entire structure of godown to the  danger  of  collapsing.
When the appellant inquired the respondent about the  same,  the  respondent
asked the appellant to vacate the godown.  The  respondent  also  threatened
the workers of the appellant. Therefore, according  to  the  appellant,  the
excavation made by the  respondent  was  intentional  and  directed  towards
terminating the tenancy of the appellant by adopting dubious methods. It  is
also alleged that the respondent also closed the access  road  to  the  suit
property. Thus, the appellant was unable to keep its goods in  or  take  out
its  goods  from  the  suit  property,  causing  irreparable  loss  to   the
appellant.
9.    The appellant filed a Regular Civil Suit No. 211 of 1990 in the  Court
of IInd Jt.Civil Judge, J.D. Karad, at Karad.  In the said civil  suit,  the
appellant prayed that the respondent be restrained from closing  the  access
of the appellant  to  the  suit  property  from  the  municipal  road.   The
appellant further prayed that the respondent be restrained from  digging  in
a manner which would cause damage to the godown.
10.   In  the  said  suit,  initially  ad  interim  injunction  was  granted
restraining the respondent from further digging the suit property.  Finally,
on 28th May, 1990, ex-parte interim injunction  was  vacated.  Aggrieved  by
the same, the appellant filed a Misc. Civil Appeal No. 123  of  1990  before
the IIIrd  Additional District Judge, Satara against  the  order  passed  in
RCS No. 211 of 1990.
11. The said appeal was also dismissed on 16th April, 1996. It  was  alleged
that the respondent thereafter went ahead with further  destruction  of  the
godown and demolished the western wall of the godown on 21st October,  1996.
Aggrieved by the same,  the appellant moved an application for amendment  of
the plaint bringing on record that on 21st  October,  1996,  the  respondent
again pulled down some portion of the western wall of the godown and due  to
the damage caused to base of the property,   during  the  rainy  season  the
remaining walls also had collapsed.  The appellant sought amendment  of  the
plaint and inclusion  of  prayer  to  the  effect  that  the  respondent  be
directed to reconstruct the walls by order  of  mandatory  injunction.   The
appellant further prayed that it may be allowed to reconstruct the walls  of
the godown and the respondent should not be allowed to  destroy  or  disturb
the appellant from construction of the godown.
12.   The amendment sought for by the appellant was  initially  not  allowed
by the learned Civil Judge. The High Court by order dated 15th  March,  2002
in Civil Revision No. 447 of 2002 allowed the amendment.
13.    The  respondent  filed  written  statement  and  additional   written
statement in which one  of  the  grounds  was  taken  was  that  godown  got
demolished due to natural cause and not due to the acts of the respondent.
14.   By the Judgement and decree dated 30th  August,  2002,  learned  Civil
Judge dismissed the suit filed by the appellant.
15.   Being aggrieved by the  judgement  and  decree  passed  by  the  Trial
Court, the appellant filed a Regular Civil Appeal No. 86 of 2002 before  the
learned Addl. District Judge, Karad.  By its judgement and order dated  30th
November, 2005, the  learned  Addl.  District  Judge,  Karad  dismissed  the
appeal of the appellant.
16.   Against the judgement and decree of the  Learned  Additional  District
Judge, Karad,  the appellant filed  Second Appeal No.  109  of  2006  before
the High Court of Judicature at  Bombay.   By  its  impugned  judgement  and
decree dated 18th July, 2006, the High Court dismissed the second appeal  on
the ground that the tenancy  right  of  the  appellant  had  lapsed  and  no
substantial question of law was involved in the appeal.
17.   Learned counsel appearing for the appellant submitted that even  after
the destruction of the tenanted premises, the  tenancy  is  not  determined,
and hence the appellant is entitled to the benefit of Section  108(B)(e)  of
the Transfer of Property Act, 1882  (hereinafter  referred  to  as  ‘the  TP
Act’). It was contended that even if the  tenanted  premises  is  completely
destroyed and  renders  the tenanted premises substantially  or  permanently
unfit for the purpose for which it was let out, the lease subsists till  the
tenant terminates the lease.
18.    In order to fully and appropriately appreciate the issue involved  in
the present case, it is desirable to refer to  the  relevant  provisions  of
the Transfer of Property Act, 1882 (T.P. Act for short).
19.   Chapter V of the T.P. Act, 1882 deals  with  the  lease  of  immovable
property. Section  105  of  the  T.P.  Act  defines  ‘lease’  and  the  said
definition is as under:
“105. Lease defined.-  A lease of immoveable property is  a  transfer  of  a
right to enjoy such property, made for a certain time, express  or  implied,
or in perpetuity, in consideration of  a  price  paid  or  promised,  or  of
money, a share of crops,  service  or  any  other  thing  of  value,  to  be
rendered periodically or on specified occasions to  the  transferor  by  the
transferee, who accepts the transfer on such terms.

|Lessor, lessee, premium and rent defined. —The transferor is called the |
|lessor, the transferee is called the lessee, the price is called the    |
|premium, and the money, share, service or other thing to be so rendered |
|is called the rent.”                                                    |
|                                                                        |

20.   Section 108 of the T.P. Act  explains  the  rights  &  liabilities  of
lessor and lessee and  provisions  of  the  said  section  relevant  to  the
present case i.e. Section 108(B)(e) reads as under:

“108. Rights and liabilities of lessor or lessee. –  In  the  absence  of  a
contract or local usage to the contrary,   the  lessor  and  the  lessee  of
immovable property,  as  against  one  another,  respectively,  possess  the
rights and are subject to the   liabilities  mentioned  in  the  rules  next
following, or such of them as are applicable to the      property leased:-

Rights and Liabilities of the Lessor

x x x x x

Rights and liabilities of the Lessee
   (e) If by fire, tempest or flood, or violence of any army or  of  a  mob,
or other irresistible force, any material part of  the  property  be  wholly
destroyed or rendered substantially and permanently unfit for  the  purposes
for which it was let, the lease shall, at  the  option  or  the  lessee,  be
void:
Provided that, if the injury be occasioned by the wrongful  act  or  default
of the lessee, he shall not be entitled to avail himself of the  benefit  of
this provision;”


21.   The lease of immovable property  is  determined  by  modes  stipulated
under Sections 106 and 111 of the T.P. Act.    Section 111 of the  T.P.  Act
reads as under:

 “111. Determination of lease


A lease of immovable property determines-


(a) by efflux of the time limited thereby,


(b) where such time is limited conditionally on the happening of some event-
by the happening of such event,


(c) where the interest of the lessor in the property terminates on,  or  his
power to dispose of the same extends only to, the happening of any  event-by
the happening of such event,


(d) in case the interests of the lessee and the lessor in the whole  of  the
property become vested at the same time in one person in the same right,


(e) by express surrender, that is to say, in case the lessee yields  up  his
interest under the lease to the lessor, by mutual agreement between them,


(f) by implied surrender,


(g) by forfeiture; that is to say, (1) in case the lessee breaks an  express
condition which provides that, on breach thereof, the lessor  may  re-enter;
or (2) in case the lessee renounces his character as such by  setting  up  a
title in a third person or by claiming title in himself; or (3)  the  lessee
is adjudicated an insolvent and the lease provides that the lessor  may  re-
enter on the happening of such event; and in any of these cases  the  lessor
or his transferee gives notice in writing to the lessee of his intention  to
determine the lease,


(h) on the expiration of a notice to determine the lease, or to quit, or  of
intention to quit, the property leased, duly  given  by  one  party  to  the
other.”


22.   Immovable property means landed property and  may  include  structures
embedded in  the  earth  such  as  walls  or  buildings  for  the  permanent
beneficial enjoyment. A lease of immovable property is a transfer  of  right
to enjoy such property in consideration of price paid as per Section 105  of
the T.P. Act. By way of lease, a right and interest is created which  stands
transferred in favour of the lessee.  The  immovable  property,  thereafter,
only can be reverted back on determination of such  right  and  interest  in
accordance with the provisions of the T.P. Act. Therefore,  once  the  right
of lease is transferred in favour  of  the  lessee,  the  destruction  of  a
house/building constructed on the lease  property  does  not  determine  the
tenancy rights of occupant which is incidental to the contract of the  lease
which continues to exist between the parties.
23.   The  Kerala  High  Court  in  V.  Kalpakam  Amma  vs.  Muthurama  Iyer
Muthurkrishna Iyer, AIR  1995  Kerala  99,  held  that  there  cannot  be  a
building without a site and once a structure is put up in the land the  site
becomes the part of the structure and, thereafter the site becomes  part  of
the building. The  Court further held:
      “14. The Supreme Court had also occasion to consider  the  meaning  of
the word ‘building’ in D.G. Gouse and Co. v. State of Kerala  (1980)  2  SCC
410: (AIR 1980 SC 271). It was a case challenging the  constitutionality  of
the Kerala Building Tax Act, 1975.  Paragraph 21 of the judgment deals  with
the definition of the word ‘building’. It read thus:-
      “The word “building” has been defined  in  the  oxford  Dictionary  as
follows:
      That which is built; a structure, edifice;  now  a  structure  of  the
nature of a house built where it is to stand.
      Entry 49 of Schedule  VII  of  the  Constitution  of  India  therefore
includes the site of the building as its component part.  That,  if  we  may
say so, inheres in the concept or the ordinary  meaning  of  the  expression
“building”.
      15.   A somewhat similar point arose for consideration in  Corporation
of the City of Victoria v. Bishop of Vancouver Island, AIR 1921 PC 240  with
reference to the meaning of the word “building”  occurring  in  Section  197
(1) of the Statutes of British Columbia 1914. It  was  held  that  the  word
must receive its natural and ordinary meaning as “including  the  fabric  or
which it is composed, the ground upon which its walls stand and  the  ground
embraced within those walls”. That appears to us to be the  correct  meaning
of the word ‘building’.
      15A. In Stroud’s Judicial  Dictionary  (Vol.I.  5th  Edn.),  the  word
‘building’ is defined thus: “What is a building must always  be  a  question
of degree and circumstances”. In Black’s  Law  Dictionary  (5th  Edn.),  the
meaning of the word building is given as follows: “A  structure  or  edifice
enclosing a space within  its  walls,  and  usually,  but  not  necessarily,
covered with a roof”. In Bourvier’s Law Dictionary (A  Concise  Encyclopedia
of the Law Vol.I. 3rd Revision) the meaning of  building  is  given  as  “an
edifice, erected by art, and fixed  upon  or  over  the  soil,  composed  of
brick, marble, wood, or other  proper  substance,  connected  together,  and
designed for use in the position in which it is so fixed.”
      16.   The above are some of the natural meanings  that  are  given  to
the word ‘building’. Adopting the above meaning, the  word  ‘building’  must
take in the site also, as part of it. If that is  so,  without  site,  there
cannot be a  structure  and  the  site  becomes  an  integral  part  of  the
building. Without a site, the super structure of the building  on  the  land
cannot normally exist. Thus, when there is  a  lease  of  a  building,  such
lease would normally take in the site unless it specifically  excluded  from
the land.”

24.   Similar issue was considered by the Bombay High Court in  Hind  Rubber
Industries (P) Ltd. vs. Tayebhai Mohammedbhai Bagasarwalla,  AIR  1996  Bom.
389. In the said case, the High Court observed as under:
“16. In my view, the correct legal position in this country  appears  to  be
that the destruction of the  tenanted  structure  does  not  extinguish  the
tenancy and the right of occupation of the  tenant  under  the  contract  of
tenancy continues to exist between the parties. Merely because the  tenanted
structure has been destroyed or demolished, the right transferred under  the
lease cannot be said to have come to an end, and the relationship of  lessor
and lessee continues to exist. The  destruction  of  the  tenanted  premises
does not destroy the tenancy  rights  nor  does  it  bring  to  an  end  the
relationship of lessor and lessee or for that matter  landlord  and  tenant.
The lessee continues to be lessee in the  property  leased  even  after  its
destruction by fire or such like  event  unless  the  lessee  exercises  his
option  of  treating  such  lease  as  void.  It  may   be   observed   that
Section 108 of the T.P. Act deals with the rights and liabilities of  lessor
and lessee and Part-B and clause (e) of  Section 108 provides  that  if  the
property  leased  in  wholly  destroyed  or   rendered   substantially   and
permanently unfit for the purposes for which it was leased by fire,  tempest
or flood or violence of any army or of a mob or  other  irresistible  force,
such lease may be rendered void at the option  of  the  lessee  provided  of
course that such injury to the lease property has  not  been  occasioned  by
the wrongful act or default of the lessee. That  means  that  right  of  the
lessee in the leased property subsists even if the leased properly has  been
destroyed by fire, tempest or flood or violence of an army or of  a  mob  or
other irresistible force unless the lessee  exercises  his  option  that  on
happening of such events the lease has  been  rendered  void.  By  necessary
corollary, therefore, if the leased property is destroyed  wholly  by  fire,
the lease cannot be said to  be  extinguished,  nor  can  it  be  said  that
lessee's right in the leased property has come to an end unless  the  lessee
exercises  such  option.  The   express   provision   in   clause   (e)   of
Section 108 leaves  no  manner  of  doubt  that  on  destruction  of  leased
property  by  fire,  the  lease  cannot  be   said   to   be   extinguished,
automatically and in this view of the matter the statement of  law  made  in
Article 592 of American Jurisprudence and para 2066 of Woodfall on  landlord
and  tenant   and   relied   upon   by   the   learned   counsel   for   the
Plaintiff/Respondent cannot be applicable in our country. The  view  of  the
Kerala High  Court  in  Dr.  V. Siddharthan's  case:  (supra)  is  also  not
acceptable because of no proper construction given to Section 108(e) of  the
T.P. Act.”

25.   Adverting to one of the situations similar to  that,  now  before  us,
the two Judge-Bench of this Court in Vannattankandy Ibrayi (supra)  observed
as under:
 “20. From the aforesaid decisions there is no doubt that if a  building  is
governed by the State Rent Act  the  tenant  cannot  claim  benefit  of  the
provisions of Sections 106, 108  and  114  of  the  Act.  Let  us  test  the
arguments of learned counsel for the appellant that on  the  destruction  of
the shop the tenant can resist his dispossession on the strength of  Section
108(B)(e). In this case what was let out  to  the  tenant  was  a  shop  for
occupation to carry on business. On the destruction of the shop  the  tenant
has ceased to occupy the shop and he was  no  longer  carrying  on  business
therein. A perusal of Section 108(B)(e) shows  that  where  a  premises  has
fallen down under the circumstances mentioned therein,  the  destruction  of
the shop itself does not amount to determination of  tenancy  under  Section
111 of the Act. In other  words  there  is  no  automatic  determination  of
tenancy and it continues to exist. If the tenancy continues, the tenant  can
only squat on the vacant land but  cannot  use  the  shop  for  carrying  on
business as it is destroyed and further he cannot construct any shop on  the
vacant land. Under such circumstances it is the tenant who is to  suffer  as
he is unable to enjoy the fruits of the tenancy but he is saddled  with  the
liability to pay monthly rent to the landlord. It is for  such  a  situation
the tenant has been given an option under Section 108(B)(e) of the  Transfer
of Property Act to render the lease of the premises as void  and  avoid  the
liability to pay monthly rent to the landlord. Section 108(B)(e)  cannot  be
interpreted to mean that the tenant is entitled to squat on  the  open  land
in the hope that in future if any shop is constructed on the site where  the
old shop existed  he  would  have  right  to  occupy  the  newly-constructed
premises on the strength of original contract of tenancy.  The  lease  of  a
shop is the transfer of the property for its enjoyment.  On  destruction  of
the shop the tenancy cannot be said to be continuing since the tenancy of  a
shop presupposes a property in existence  and  there  cannot  be  subsisting
tenancy where the property is not in existence. Thus when the tenanted  shop
has been completely destroyed, the tenancy right stands extinguished as  the
demise must  have  a  subject-matter  and  if  the  same  is  no  longer  in
existence, there is an end of the tenancy and  therefore  Section  108(B)(e)
of the Act has no application in case of  premises  governed  by  the  State
Rent Act when it is completely destroyed by natural calamities.”

23. In V. Kalpakam Amma(supra)  the  Kerala  High  Court  relying  upon  the
definition of “building” in the State Rent Act held that there cannot  be  a
building without a site and once a structure is put up in the land the  site
becomes part of the structure and thereafter the site becomes  part  of  the
building and on that basis the  High  Court  held  that  once  the  premises
covered by the State Rent Act is raised to the ground the tenancy  continues
to survive in respect of the vacant land.  In  our  view  this  is  not  the
correct interpretation of Section 2(1) of the State Rent Act.  Section  2(1)
uses the words “part  of  a  building  or  hut”.  The  words  “part  of  the
building” do not refer to the land on which the building is constructed  but
refer to any other superstructure which is part of that main  building  e.g.
in addition to the main building if there is  any  other  superstructure  in
the said premises i.e. motor garage or servant quarters then the same  would
be part of the building and not the land on which the building has  been  so
constructed. So far  the  appurtenant  land  which  is  beneficial  for  the
purpose of use of the  building  is  also  a  part  of  the  building.  Thus
according to the  definition  of  “building”  in  the  State  Rent  Act  the
building would include any  other  additional  superstructure  in  the  same
premises and appurtenant land. We are,  therefore,  of  the  view  that  the
interpretation put by the Kerala High Court  on  Section  2(1)  for  holding
that the words “part of a building” mean the land on which the building  has
been constructed is not correct.  The  provisions  of  the  State  Rent  Act
clearly show that the State Rent Act is a self-contained Act and the  rights
and liabilities of landlord and tenant  are  determined  by  the  provisions
contained therein and not by the provisions of the Transfer of Property  Act
or any other law. The rights  of  a  landlord  under  the  general  law  are
substantially curtailed by the provisions of the State Rent Act as  the  Act
is designed to confer benefit on tenants by providing accommodation  and  to
protect them from unreasonable eviction. In the present case  what  we  find
is  that  the  subject-matter  of  tenancy  was  the  shop  room  which  was
completely destroyed on account of accidental fire and it was  not  possible
for the tenant to use the shop for which he took the  shop  on  rent.  After
the shop was destroyed the tenant, without  consent  or  permission  of  the
landlord, cannot [pic]put up a new construction on the site  where  the  old
structure stood. If it is held that despite the  destruction  of  the  shop,
tenancy over the vacant land  continued  unless  the  tenant  exercises  his
option under Section 108(B)(e) of the Act  the  situation  that  emerges  is
that the tenant would continue as a tenant of a  non-existing  building  and
liable to pay rent to the landlord when he is unable to use  the  shop.  The
tenancy of the shop, which was let out, was a  superstructure  and  what  is
protected by the State Rent Act is the  occupation  of  the  tenant  in  the
superstructure. If the argument of the appellant’s counsel is accepted  then
it would mean that although the  tenant  on  the  destruction  of  the  shop
cannot put up a new structure on the old site still  he  would  continue  to
squat on the vacant land. Under such situation it is difficult to hold  that
the tenancy is not extinguished on the total  destruction  of  the  premises
governed by the State Rent Act. Under English law, in a contractual  tenancy
in respect of building and land the liability to pay the rent by the  tenant
to the landlord continues even on the destruction of  the  building  whereas
there is no liability of the tenant to pay  rent  to  the  landlord  on  the
destruction of the premises governed by the State Rent Act.  Therefore,  the
view  taken  by  the  Bombay  High  Court  in  Hind  Rubber  Industries  (P)
Ltd.(supra) does not lay down the correct view of law. This Court  a  number
of times has held that any special leave petition dismissed  by  this  Court
without giving a reason has no binding force on  its  subsequent  decisions.
Therefore, the two aforesaid cases relied on by counsel  for  the  appellant
are of no assistance to the argument advanced by him.
24. However, the situation would  be  different  where  a  landlord  himself
pulls down a building governed by the State Rent Act. In  such  a  situation
the provisions contained in Section 11  of  the  State  Rent  Act  would  be
immediately attracted and the Rent Control Court would be free  to  pass  an
appropriate order.
25. Coming to the next question whether the civil  court  was  competent  to
entertain and  try  the  suit  filed  by  the  respondent  for  recovery  of
possession of the vacant land. As already stated above, the tenancy  in  the
present case was of a shop room which was let out to  the  tenant.  What  is
protected by the State Rent Act is the  occupation  of  the  tenant  in  the
superstructure.  The  subject-matter  of  tenancy  having  been   completely
destroyed the tenant can no longer use the said shop  and  in  fact  he  has
ceased to occupy the said shop. Section 11 of the State Rent  Act  does  not
provide for eviction of the tenant on  the  ground  of  destruction  of  the
building or the superstructure. Thus when  there  is  no  superstructure  in
existence the landlord cannot claim recovery of possession  of  vacant  site
under the State Rent Act. The only remedy available to  him  is  to  file  a
suit in a civil court for recovery of possession of land.  In  view  of  the
matter the civil court was competent to entertain and try the suit filed  by
the respondent landlord.”

26.   Subsequently, another two-Judge Bench of  this  Court  considered  the
same question in T. Laxmipathi(Supra). In the said case this  Court  noticed
the decision of Bombay High Court in  Hind  Rubber  Industries  (supra)  and
other High Courts and observed as under:
“20. The tenancy cannot be  said  to  have  been  determined  by  attracting
applicability of the doctrine of frustration consequent upon demolishing  of
the tenancy premises. Doctrine of frustration belongs to the  realm  of  law
of contracts; it does not apply to a transaction where not  only  a  privity
of contract but a privity of estate has also been created inasmuch as  lease
is the transfer of an interest in immovable property within the  meaning  of
Section 5 of the Transfer of Property Act (wherein the phrase “the  transfer
of property” has been defined), read  with  Section  105,  which  defines  a
lease of immovable  property  as  a  transfer  of  a  right  to  enjoy  such
property. (See observations of this Court in this regard in Raja  Dhruv  Dev
Chand v. Raja Harmohinder [pic]Singh6.)  It  is  neither  the  case  of  the
appellants nor of Respondents 2 and 3 that the subject-matter of  lease  was
the building and the building alone, excluding  land  whereon  the  building
forming the subject-matter of tenancy stood  at  the  time  of  creation  of
lease.
22. A lease  of  a  house  or  of  a  shop  is  a  lease  not  only  of  the
superstructure but also of its site. It would be different if not  only  the
site but also the land beneath ceases to exist by an act of nature.  In  the
present case the appellants who are the  successors  of  the  tenancy  right
have demolished the superstructure but the land beneath continues to  exist.
The entire tenancy premises have not been  lost.  Moreover,  the  appellants
cannot be permitted to take shelter behind their own act prejudicial to  the
interest of Respondent 1 under whom Respondents 2  and  3  were  holding  as
tenants and then inducted the appellants.
24. We are, therefore, of the opinion that  in  the  event  of  the  tenancy
having been created in respect of a building standing on  the  land,  it  is
the building and the land which are both components  of  the  subject-matter
of demise and the destruction of the building alone does not  determine  the
tenancy when the land which was  the  site  of  the  building  continues  to
exist; more so when the building has been destroyed  or  demolished  neither
by the landlord nor by an act of nature but solely by the act of the  tenant
or the person claiming under him. Ample judicial authority is  available  in
support of this  proposition  and  illustratively  we  refer  to  George  J.
Ovungal v. Peter [AIR 1991 Ker 55], Rahim Bux v. Mohd. Shafi [AIR  1971  All
16], Hind Rubber Industries (P) Ltd. (supra) and Jiwanlal & Co. v.  Manot  &
Co. Ltd.[(1960)64 CWN 932].  The Division Bench decision of the Kerala  High
Court in V. Sidharthan (Dr) v. Pattiori Ramadasan appears to take a view  to
the contrary. But that was a case where the building was  totally  destroyed
by fire by negligence of the tenant. It is a case  which  proceeds  on  very
peculiar facts of its own and was rightly dissented from by the Bombay  High
Court  in  Hind  Rubber  Industries  (P)  Ltd.  v.   Tayebhai   Mohammedbhai
Bagasarwalla.”

27.   After referring to the aforesaid two authorities, we are  required  to
scrutinize which  view  is  in  consonance  with  the  statutory  provisions
enshrined under the Transfer of Property Act.  We have already  referred  to
the statutory provisions that control the relationship  between  the  lessor
and the lessee, the definition of lease as engrafted under Section 105,  the
rights and liabilities of lessor and lessee   enshrined  under  Section  108
and the conceptual circumstances and the procedure which  find  mention  for
determination of lease under Section 111 of the Act.

28.   In Vannattankandy Ibrayi (supra) the learned Judges  referred  to  the
decision on common  law,  the  principles  in  American  jurisprudence,  and
various decisions of the High Courts  and  adverted  to  two  categories  of
tenants, namely, a tenant under the Transfer of Property Act and  the  other
under the State Rent Laws and proceeded to interpret Section 108 (B) (e)  to
hold  that  where  a  premises  has  fallen  down  under  the  circumstances
mentioned therein, the destruction of the shop itself  does  not  amount  to
determination of tenancy under Section 111  of  the  Act  and  there  is  no
automatic determination of  tenancy  and  it  continues  to  exist.  If  the
tenancy continues, the tenant can only squat on the vacant land  but  cannot
use the shop for carrying on business as it  is  destroyed  and  further  he
cannot construct any shop on the vacant land. Under  such  circumstances  it
is the tenant who is to suffer as he is unable to enjoy the  fruits  of  the
tenancy but he is saddled with the liability to  pay  monthly  rent  to  the
landlord. It is for such a situation the tenant has  been  given  an  option
under Section 108(B)(e) of the Transfer of Property Act to render the  lease
of the premises as void and avoid the liability to pay monthly rent  to  the
landlord. Taking note of this  facet,  the  Court  proceeded  to  rule  that
Section 108(B)(e) cannot be interpreted to mean that the tenant is  entitled
to squat on the open land in  the  hope  that  in  future  if  any  shop  is
constructed on the site where the old shop existed he would  have  right  to
occupy the newly-constructed premises on the strength of  original  contract
of tenancy  because lease of a shop is the transfer of the property for  its
enjoyment and on destruction of the shop the tenancy cannot be  said  to  be
continuing since the tenancy of a shop presupposes a property  in  existence
and there cannot  be  subsisting  tenancy  where  the  property  is  not  in
existence. It was further laid down that  when the tenanted  shop  has  been
completely destroyed, the tenancy right stands extinguished  as  the  demise
must have a subject-matter and if the same is no longer in existence,  there
is an end of the tenancy.

29.   As we  notice  from  the  aforesaid  analysis  it  is  founded  on  an
interpretation of Section 108  (B)  (e)  by  assuming  when  a  building  or
structure is leased out, it is the superstructure  that  is  leased  out  in
exclusivity.  As we perceive, the language employed in Section 108  (B)  (e)
does not allow such a construction.  The singular exception  that  has  been
carved out is the wrongful act or default on the part of  the  lessee  which
results in the injury to the property  that  denies  the  benefit.   In  all
other circumstances which find mention under Section 111  of  the  Act,  are
the  grounds  for  determination  of  the  lease.   This  is  the   plainest
construction of the provision and there is no other room for  adding  to  or
subtracting anything from it.  Be it  stated,  Section  108  postulates  the
rights and liabilities of lessor and lessee.  If a right  is  not  conferred
by the Statute on the lessor for determination, except one  exception  which
is clearly stipulated there in Section 108 (B) (e) by  the  Legislature,  it
would not be permissible for the Court to add another ground of the base  or
fulcrum of ethicality, difficulty or assumed supposition.

30.   In T. Lakshmipathi’s case, the  Court  referred  to  the  observations
made by a three-Judge Bench in Raja Dhruv Dev  Chand  v.  Harmohinder  Singh
and another, AIR 1968 SC 1024 wherein it has  been  held  that  doctrine  of
frustration belongs to the realm of law of contracts; it does not  apply  to
a transaction where not only a privity of contract but a privity  of  estate
has also been created inasmuch as lease is the transfer of  an  interest  in
immovable property within the meaning  of  Section  5  of  the  Transfer  of
Property Act. In the said case, it has been  further  opined  that  under  a
lease of land there is a transfer of right  to  enjoy  that  land.   If  any
material part of the property be wholly destroyed or rendered  substantially
and permanently unfit for the purpose for which it was let out,  because  of
fire, tempest, flood, violence of an army or a mob,  or  other  irresistible
force, the lease may at the option of the lessee, be  avoided  and  that  is
the rule incorporated in Section 108 (e) of the  Transfer  of  Property  Act
and applies to leases of  land,  to  which  the  Transfer  of  Property  Act
applies.

31.   It is apt to note here that when there is a lease  of  a  house  or  a
shop it cannot be treated as a lease of structure but also a lease of  site.
 The Court referred to the decision in D.G. Gose & Co. (Agents) (P) Ltd.  v.
State of Kerala  (1980) 2 SCC  410  wherein this Court held  that  the  site
of the building is a component part of the building and, therefore,  inheres
in it the concept or ordinary meaning of  the  expression  “building”.   The
Court also placed reliance on Corpn. of the city of Victoria  v.  Bishop  of
Vancouver Island  AIR 1921 PC 240.
32.   It has been further opined that once a tenancy is created  in  respect
of a building standing on the land it is the building  and  the  land  which
are both components of the subject-matter of demise and the  destruction  of
the building alone does not determine the tenancy when  the  land  which  is
the site of the building continues to exist.   This  interpretation,  as  we
find, is in accord with Section 108 of the Act. It is  reflectible  that  in
Vannattankandy Ibrayi’s case, the two-Judge Bench observed that  the  rights
stand extinguished as on  the  distinction  of  the  demise,  for  there  is
destruction of the superstructure and  in  its  non-existence  there  is  no
subject matter. Thus, the land has been kept out of the concept  of  subject
matter.  In our considered opinion, the Court in the  said  case  failed  to
appreciate that there are two categories of subject-matters, combined  in  a
singular capsule, which is the essence of provision under  the  Transfer  of
Property  Act  and  not  restricted  to  a  singular  one,  that   is,   the
superstructure.  In T. Lakshmipathi (supra) the Court took note of the  fact
that the land and superstructure standing on it as a singular component  for
the purpose of tenancy.   It  is  in  tune  with  the  statutory  provision.
Therefore, we agree with the proposition stated therein to the  affect  that
“in the event of the tenancy having been created in respect  of  a  building
standing on the land, it is  the  building  and  the  land  which  are  both
components of the subject-matter  of  demise  and  the  destruction  of  the
building alone does not determine the tenancy when the land  which  was  the
site of the building  continues  to  exist”.   On  the  touchstone  of  this
analysis,  we   respectfully   opine   that   the   decision   rendered   in
Vannattankandy Ibrayi (supra) does not correctly lay down  the  law  and  it
is, accordingly, overruled.

33.   In the present  case,  it  is  not  in  dispute  that  the  respondent
purchased the lessor’s interest. The lease  continued  even  thereafter  and
did not extinguish.  The lease was subsisting when the shares  of  the  land
were purchased by the respondent. But the interest of  the  lessee  was  not
purchased by the respondent.  What has been purchased by the  respondent  is
the right and interest of ownership of the property.  The  interest  of  the
appellant as lessee has not been vested with the respondent.  Therefore,  we
are of the view that the tenancy of the appellant cannot  be  said  to  have
been determined consequent upon demolition and destruction of  the  tenanted
premises.
34.   In view of the fact and circumstances of the case, we  have  no  other
option but to set aside the impugned judgment and decree  dated  18th  July,
2006 passed by the High Court of Judicature at Bombay in Second  Appeal  No.
109 of 2006 and Judgment and decree dated 30th November, 2005 passed by  the
Addl. District Judge, Karad in RCA No. 86  of  2002.  However,  taking  into
consideration the fact that the appellant is not in possession of  the  suit
property  since  long,  we  are  not  inclined  to  direct  restoration   of
possession of  suit  property  to  the  appellant.  Instead  we  direct  the
respondent to pay a sum of Rs. 20,00,000/- (Rupees  Twenty  Lakhs  only)  in
favour of the appellant towards compensation  for  depriving  the  appellant
from enjoying the suit property, within two months, failing which  it  shall
be liable to pay interest @ 6% per annum from the date of the judgment.
35.   The appeal is allowed with the aforesaid  observation  and  direction.
No costs.

                                               …………………………………………………………………CJI.
                                           (R.M.LODHA)

                                               ………………………………………………………………………J.
                                               (SUDHANSU JYOTI MUKHOPADHAYA)

                                               ………………………………………………………………………J.
                                (DIPAK MISRA)
NEW DELHI,
JULY 10, 2014.

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