Karnataka High Court

Sri K P Ashokumar vs M/S Shiksha Associates on 7 October, 2021

Author: Suraj Govindaraj

                                           CRP NO.456 OF 2019
                          1



  IN THE HIGH COURT OF KARNATAKA AT BENGALURU

      DATED THIS THE 7TH DAY OF OCTOBER, 2021

                        BEFORE

      THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ

  CIVIL REVISION PETITION No.456 OF 2019 (IO)

BETWEEN

SRI K.P.ASOKUMAR
S/O. LATE SRI.K.N.PADMANABHAIAH,
AGED ABOUT 78 YEARS,
R/AT "HILL VIEW", NO.1289,
14TH CROSS, GIRINAGAR 2ND PHASE,
BENGALURU - 560 085.
                                            ... PETITIONER

[BY SRI. C.M.NAGABUSHANA, ADVOCATE - PH]

AND

M/S. SHIKSHA ASSOCIATES
A REGISTERED PARTNERSHIP FIRM,
NO.445, 9TH CROSS, 2ND PHASE,
J.P.NAGAR,
BENGALURU - 560 078.

REPRESENTED ITS PARTNER
SMT. PREETHI VICKRAM
ALSO AT NO.27, MARKET ROAD
NEAR GANDHI BAZAR, TAGORE CIRCLE
BENGALURU - 560004
                                           ... RESPONDENT

[BY SRI. MANMOHAN P.N., ADVOCATE - VC]

      THIS CIVIL REVISION PETITION IS FILED UNDER
SECTION 115 OF CPC., AGAINST THE ORDER DATED
23.09.2019 PASSED ON IA.NO.II IN O.S.NO.4239/2018 ON THE
                                           CRP NO.456 OF 2019
                          2



FILE OF THE LX ADDL. CITY CIVIL AND SESSIONS JUDGE,
BENGALURU, REJECTING IA NO.II FILED UNDER VII RULE 11(a)
of CPC FOR REJECTION OF PLAINT

     THIS CRP COMING ON FOR ADMISSION AND HAVING
BEEN RESERVED FOR ORDERS ON 10.08.2021, THIS DAY, THE
COURT PRONOUNCE THE FOLLOWING:

                        ORDER

1. The Petitioner is before this Court aggrieved by

the order dated 23.09.2019 passed by the LX

Additional City Civil and Sessions Judge (CCH-

61), Bengaluru rejecting I.A.No.2 being an

application under Order VII Rule 11 of the Civil

Procedure Code (for short 'of CPC') filed in

O.S.No.4239/2018 and further seeking for the

said application of I.A.No.2 to be allowed.

2. O.S.No.4239/2018 has been filed seeking for

recovery of a sum of Rs.14,76,737/- along with

interest thereon. The said amount being the

alleged refund of interest free security deposit CRP NO.456 OF 2019

and interest thereon paid under a lease dated

01.04.2016.

3. An application under Order VII Rule 11(a) CPC

came to be filed by the defendant contending

that the plaint does not make out a cause of

action inasmuch as the plaintiff/tenant did not

have a right to terminate the tenancy, the

notices dated 01.11.2019 and 10.01.2018, which

are said to have been issued are without any

basis or authority under law.

4. There being no right to terminate, the question

of the plaintiff seeking for refund of the interest

free security deposit would not arise and

therefore, sought for rejection of the plaint.

5. The trial Court vide its order dated 23.09.2019

dismissed the said application by holding that

the issues which have been raised as regards the CRP NO.456 OF 2019

authority of the plaintiff/tenant to determine the

tenancy or not would require trial. What was

contemplated under Order VII Rule 11(a) of CPC

is that the plaint did not disclose the cause of

action since the plaint had a para relating to

cause of action that would suffice. Other aspects

could not be decided at that stage and dismissed

the application.

6. It is aggrieved by the same that the defendant is

before this Court seeking for the aforesaid relief.

7. Sri. C.M.Nagabhushan, learned counsel

appearing for the Petitioner, would submit that

7.1. in terms of the registered lease deed dated

01.04.2016 there is no authority granted to

the Lessee to terminate the Lease. The

Lease is for a fixed period of 10 years. The

only authority given to terminate is to the CRP NO.456 OF 2019

Lessor, that too is limited only on account

of non-payment of rent for a period of two

months or more which on notice is not

rectified; if rectified, the Lessor could also

not terminate the Lease.

7.2. If not for the aforesaid breach, even the

Lessor could not terminate; there is no

particular provision in the Lease permitting

the Lessee to terminate. Both the parties

are equally bound by the terms of the

agreement, the Lease is not determinable

at the option of each of the parties, can

only be determined by efflux of time on the

completion of the period of Lease which is a

on the completion of lease period of 10

years on 31.03.2026.

CRP NO.456 OF 2019

7.3. A reading of the entire plaint would indicate

that the so called determination of the

Lease done by the Lessee is on account of

the alleged repairs not having been carried

out by the Lessor.

7.4. In terms of Clause 7 of the lease

agreement, the Lessee could have got the

repairs and maintenance work done which

is an obligation of the Lessee under the

Lease. There is no obligation of carrying

out any repairs on the part of the Lessor.

Clause 6 & 7 is reproduced hereunder for

easy reference:

"6. That whenever any party of the rent shall be in arrears for two months, after due date or there shall be a breach of any of the convenants by the lessees herein, the Lessor shall have the right to re-enter the schedule property and determine the Lease.

7. If during the lease period, any repairs or maintenance work is to be CRP NO.456 OF 2019

done, the lessees hereby undertake to attend to such repairs and maintenance at their own cost and keep the schedule property in a reasonably good condition and deliver vacant possession of the same to the Lessor on the expiry of the lease period or on the termination of the Lease whichever is earlier."

7.5. He further relied upon the following

decisions.

7.6. Jatindra Kumar Dass Vs. Dhirailal

Vrajlal Kanakia reported in AIR 1975

Calcutta 123 para-15 reads as follow:-

"15. It has been contended by Mr. S. K. Lahiri, appearing on behalf of the defendant, that from such correspondence it appeared that the plaintiff never disputed his obligation to keep the godown in repair and in fact, alleged that he had caused such repairs to be effected. Mr. Lahiri contended further that from the conduct of the plaintiff it can be presumed that under the agreement of tenancy the plaintiff was bound to keep the premises in repair. It is to be noted that Pathak deposing on behalf of the plaintiff has stated that the plaintiff agreed to carry out the minor repairs in order to maintain good relationship with the tenant.

Assuming that the plaintiff was bound to carry out repairs under the agreement of CRP NO.456 OF 2019

tenancy, can there be a further assumption that if such repairs were not carried out the defendant had a further right under the agreement to withhold payment of rent? Under Section 108 Sub- section (f) of the Transfer of Property Act neglect to repair the premises by a lessor after notice, which the Lessor is bound to make under the Lease does not confer any right on the Lessee to withold payment of rent. Such a right can only follow from a special covenant, see."

7.7. Thiagaraswami Devasstanam

Tirukkavalai Vs.. Kamalappa Thevar

and others reported in AIR 1962 Madras

439 para-16 reads as follows:

"16. Mr. K. S. Desikan appearing for one of the respondents relied on a decision in Anandilal v. Ram Sarup, AIR 1936 All

495. At page 501, following passage occurs:

"It is impossible to say that merely because the receiver is an officer of the court, his taking over possession is not a dispossession for the person previously in possession. If his taking over possession of any property were not to amount to the removal of any person from the possession or custody of such property, then there was no occasion for sub-rule (2) at all. It need not have been there. The very fact that it has been enacted CRP NO.456 OF 2019

shows that the legislature intends that if a receiver takes possession of some property, then the person from whose custody or possession it is taken has been removed from such possession or custody. As such a receiver is appointed, and property is taken possession of by him the property passes out of the possession and custody of the other person. Even where the person in possession is himself appointed the receiver, the character of his possession changes and his liability is of a different nature, as he becomes an officer of the court and holds possession of the property on its behalf."

The learned counsel contends that this case is an authority for the proposition that when a receiver is appointed for a property it amounts to dispossession of the person from whom possession is taken. The facts of the present case are entirely different and, as already observed, the tenants had abandoned possession and were not in the least interested in possession of the lands. On an examination of the authorities cited above it is clear that the landlord can hold the tenant liable for rent provided he makes his intention clear of so doing. In this case the plaintiff refused to accept the surrender. In getting a receiver appointed the plaintiff made it clear that he was asking the appointment of a receiver to have the property from lying fallow and getting deteriorated in fertility. The possession by the receiver was not intended for the plaintiff's benefit and the defendants never ceased to be liable to pay rent. In the circumstances I hold that in spite of the appointment of a receiver for faslis 1357 and 1358 the defendants CRP NO.456 OF 2019

did not cease to be liable for payment of rent. The lower court was in error in holding that the appointment of a receiver operated to change possession and that the landlord acted in contravention of the covenant to give the Lessee quiet possession and enjoyment. The lower court was also in error in holding that the application for the appointment of a receiver in O. S. No. 267 of 1947 was not justified. The appointment of a receiver in O. S. No. 267 of 1947 was by consent and became final as between the parties as none of the parties took the matter up in appeal or in revision."

7.8. Hans Raj Bansal Vs. Hardev Singh

reported in AIR 1984 Punjab &

Harayana 229 para-9 of last part reads as

follows:

"........... In the light of this authoritative pronouncement I find it difficult to concur with the ratio and conclusion recorded by the learned Judges of the Bombay High Court in Rattan Lal's case (supra). Otherwise also I find that the various clauses of Section 111 of the Transfer of Property Act only indicate the various ways in which a tenancy or Lease can be determined. It makes the least difference in what manner or under which of these clauses the Lease has been determined as the cases is the determination of the Lease. It is so very clear from the opening words of the section. Further the CRP NO.456 OF 2019

happening of any of the specified events does not ipso facto put an end to the Lease but only exposes the Lessee to the risk of forfeiting his Lease and gives a right to the Lessor. If he so elects, to determine the Lease. There is no provision in the Act which enables the Lessee to determine a lease for breach by the Lessor."

7.9. Provash Chandra Dalui and another Vs.

Biswanath Banerjee and another

reported in AIR 1989 SC 1834 parar-4

reads as follows:

"4. Mr. D.K. Sen, the learned counsel for the appellants submits, inter alia, that there could be no controversy about the appellants' status of thika tenants in view of the fact that the Lease was at the first instance for 10 years only and its first and subsequent extensions were contingent on the appellants' regular payment of rents, rates and taxes and enhancement of rent; that contingency did not happen as they did not pay any enhanced rent, but simply were holding over; that the second Respondent who is the predecessor in interest of the first Respondent, admitted the Thika Tenants status of the appellants in the earlier proceedings before the Controller and were therefore estopped from questioning that status; and that the learned Courts below erred in ignoring these vital pieces of evidence."

CRP NO.456 OF 2019

7.10. Smt. Shanti Devi Vs. Amal Kumar

Banerjee reported in ARI 1981 SC 1550

para-4 reads as follows:

"4. The courts below have apparently been misled by the averments in paragraph 3 of the plaint that because the defendant could not fulfil the condition regarding obtaining of a licence, the grant made by the indenture of Lease did not and could not take effect as also that in paragraph 7 that the tenancy of Lease was from month to month. The parties could not by their pleadings alter the intrinsic character of the Lease or bring about a change of the rights and obligations flowing therefrom. The Lease was a lease for a definite term and, therefore, expired by efflux of time by reason of Section 111(a) of the Transfer of Property Act. That being so, the service of a notice under Section 106 of the Transfer of Property Act was not necessary."

7.11. By relying on the aforesaid decisions,

Sri.C.M.Nagabhushan, learned counsel for

the Petitioner submits that non-carrying of

the repairs cannot be a ground for a tenant

to terminate the Lease. In the present case CRP NO.456 OF 2019

it was the obligation of the Lessee to carry

out the repairs.

7.12. By relying on the aforesaid decisions, he

submits that at the most it was for the

Lessee who could have carried out the

repairs and collect the said amount from

the Lessor. He refers to para-6 of the plaint

and submits that the plaintiff lessee had

approached a qualified engineer who has

suggested a methodology of pumping out

the water which the plaintiff would have

got carried out instead of doing so, the

plaintiff had called upon the Lessor to do

the same and the Lessor had indicated that

the Lessee has to do it.

7.13. Instead of carrying out the said work the

Lessee cannot now contend violation of CRP NO.456 OF 2019

Clause 7 of the registered lease deed that

on account of the Lessor not carried out the

repair work the Lessee would vacate the

premises and consequently claim for the

refund of interest free deposit.

7.14. By referring to Para Nos-6, 7 and 8 of the

plaint, Sri C.M.Nagabushan, learned

counsel for the Petitioner submits that

there is no ground made out either in law

or on facts for the Lessee to have

terminated the Lease. There was no power

and authority on the part of the Lessee to

terminate the Lease. Without such

termination or determination of the Lease

no claim for refund could be made and as

such there being no cause of action, the

application under Order VII Rule 11 of CPC CRP NO.456 OF 2019

ought to have been considered in that

perspective and allowed by the trial Court.

8. Per contra, Sri.K.N.Manmohan, learned counsel

for the respondent/lessee would contend that

8.1. In terms of Section 111(h) of the Transfer

of Property Act (for short 'the TP Act),

there is a right vested with both the parties

to issue a notice to terminate the Lease

even though the registered lease deed is

for a period of 10 years.

8.2. Either of the parties to the Lease i.e., a

lessor or Lessee could determine the Lease

by issuance of a notice irrespective of the

period of Lease.

8.3. In the present case a notice has been

issued by the Lessee terminating the CRP NO.456 OF 2019

Lease, therefore, the Lessee is entitled for

refund of the interest free security deposit.

8.4. He further relies upon Section 103(e) of the

Transfer of Property Act (for short 'the TP

Act) to contend that the property which is

subject matter of the registered deed has

been rendered unfit for use, for the

purposes for which it was let out, namely,

running of a School and the basement or

the School has been flooded during rains

and there was a short circuit.

8.5. There being a danger to the children who

are studying in the School, the parents

have indicated that they would remove the

children from the School and as such the

Lessee could not carry out the objects for

which the property was taken on Lease.

CRP NO.456 OF 2019

8.6. There is no restriction in the Lease denying

the Lessee's right to terminate and

therefore, when the contract does not

speak of any such restriction, the Lessee

can terminate the Lease.

8.7. By relying on clause 7 of the Lease, he

submits that the period of 10 years is not

sacrosanct. The Lease could be determined

prior to the expiry of the period by a notice

by any party. This notice could be issued

either by a lessor or Lessee and therefore,

Clause 7 provides the Lessee also with a

right to terminate the Lease. He submits

that all these aspects would require a trial.

8.8. Whether the Lessee has right to terminate

the Lease or not would have to be

determined only after trial. They cannot be CRP NO.456 OF 2019

determined at this stage and in this regard

he relies upon the decision of the Apex

Court in the case of Mayar (H.K.) Ltd.,

and Others reported in (2006) 3 SCC

100 more particularly para-12 thereof:

12. From the aforesaid, it is apparent that the plaint cannot be rejected on the basis of the allegations made by the defendant in his written statement or in an application for rejection of the plaint. The court has to read the entire plaint as a whole to find out whether it discloses a cause of action and if it does, then the plaint cannot be rejected by the court exercising the powers under Order 7 Rule 11 of the Code. Essentially, whether the plaint discloses a cause of action, is a question of fact which has to be gathered on the basis of the averments made in the plaint in its entirety taking those averments to be correct. A cause of action is a bundle of facts which are required to be proved for obtaining relief and for the said purpose, the material facts are required to be stated but no the evidence except in certain cases where the pleadings relied on or in regard to misrepresentation, fraud, willful default, undue influence or of the same nature. So long as the plaint discloses some cause of action which requires determination by the court, the mere fact that in the opinion of the Judge the plaintiff may not succeed cannot be a ground for rejection of the plaint. In the CRP NO.456 OF 2019

present case, the averments made in the plaint, as has been noticed by us, do disclose the cause of action and, therefore, the High Court has rightly said that the powers under Order 7 Rule 11 of the Code cannot be exercised for rejection of the suit filed by the plaintiff appellants.

8.9. By relying on the aforesaid decision, he

submits that whether the plaint can be

rejected or not would have to be

considered on the basis of the contents of

the plaint. The lessee/plaintiff has

categorically stated that he determined the

Lease whether the determination is valid or

not would have to be determined after trial.

8.10. Reliance is placed upon the decision in

Kamala -v- K.T.Eshwara S.A. & others

[(2008) 12 SCC 661] to contend that

merits of the case cannot be gone into

while considering the application under VII

Rule 11(a), more particularly paragraph 22 CRP NO.456 OF 2019

which is reproduced hereunder for easy

reference:

"22. For the purpose of invoking Order 7 Rule 11(d) of the Code, no amount of evidence can be looked into. The issues on merit of the matter which may arise between the parties would not be within the realm of the Court at that stage. All issues shall not be the subject-matter of an order under the said provision."

8.11. He submits that merely because the lease

deed does not contain a clause permitting

the Lessee to terminate the Lease, the

same does not take away the power of the

Lessee to terminate the Lease as

contemplated under Section 111(h) of the

T.P. Act. The aforesaid Section is

reproduced hereunder for easy reference:

"111. Determination of Lease.--A lease of immoveable property determines-

(a) to (g) xxxx CRP NO.456 OF 2019

(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. "

8.12. The said right to terminate or determine

the Lease is a statutory right provided

under Section 111(h) of the Act, there is no

clause which prohibits the Lessee from

terminating the contract. Therefore, there

is no fetter for exercise of the right to

terminate in terms of Section 111(h). In

this regard, he relies upon the decision in

M.Shankaran -v- M.Krishnan [2018

SCC Online Madras 12069], more

particularly paragraph 26 thereof which is

reproduced hereunder for easy reference:

"26. We are not inclined to accept such a submission of the learned Senior counsel for the defendant/appellant. It is an universally accepted principle that a lease in respect of immovable property must be for a specified CRP NO.456 OF 2019

period and if the period of lease exceeds one year, such lease deed must be registered. In the absence of registration, the period specified in the lease deed cannot be taken into account or relied on and such lease will tantamount to an oral lease. In any event, even in the absence of registration of an agreement of lease entered into between the parties, it can be reasonably presumed that the lease is on a month to month basis, as has been contemplated under Section 106 of The Transfer of Property Act. At the same time, a lease pertaining to immovable property can be determined or rescinded by any one of the parties to the lease by intimating the other party about his intention to discontinue the lease well before the period stipulated in the lease or at any time during the subsistence of the lease. Such a right to determine the lease need not be expressly stated in the lease agreement as it is an implied right of one of the parties to the lease to determine or rescind the lease without assigning any reason. For determining the lease, a party to the lease must express his intention to discontinue within a reasonable period so as to enable the other party to make alternative arrangement or to enter into a lease agreement with any other person CRP NO.456 OF 2019

who is interested to take the leasehold premises inter alia to put the leasehold premises for the optimum use. Thus, one of the parties to the lease cannot be compelled to continue the tenancy upto the fullest term indicated in the lease deed. At the best, the period, if any, indicated in a contract can be discretionary and not mandatory. The intention to discontinue the tenancy may be for varied reasons, including unfavourable business condition or unforeseen circumstances or otherwise and a lessee who could not continue the lease for any reason cannot be made to stay or occupy the leasehold premises much to his detriment, till the entire period of lease gets expired. If the argument of the learned Senior counsel for the defendant is accepted, a lessee or lessor cannot determine the contract during the subsistence of the lease even if there are unforeseen circumstances or unfavourable business condition which are due to circumstances beyond one's control and that is the reason why a lease can be terminated by putting the other party to the lease on notice well in advance so that the other party cannot be struck by surprise about the intention of the other party to determine the lease. In this context, CRP NO.456 OF 2019

useful reference can be made to the decision of the Honourable Supreme Court in (Anthony vs. K.C. Ittoop and sons and others) reported in 2000 (6) Supreme Court Cases 394 wherein it was held as follows:-

"8. The lease deed relied on by the plaintiff was intended to be operative for a period of five years. It is an unregistered instrument. Hence such an instrument cannot create a lease on account of three- pronged statutory inhibitions. The first interdict is contained in the first paragraph of Section 107 of The Transfer of Property Act, 1982....

11. The resultant position is insurmountable that so far as the instrument of lease is concerned, there is no scope for holding that the appellant is a lessee by virtue of the said instrument. The Court is disabled from using the instrument as evidence and hence it goes out of consideration in this case...."

8.13. The decision in State Bank of India -v-

William [AIR 2004 KER 153] paragraphs

4, 5 and 6 thereof which are reproduced

hereunder for easy reference:

CRP NO.456 OF 2019

"4. It is admitted case of the parties that the building of the plaintiff's father was taken on rent by the Bank of Cochin Ltd.

at a monthly rent of Rs. 300 for a period of 20 years. Ext. B1 is the rent deed executed by the parties. The building was taken on rent for the accommodation of the Branch manager of the then manager of the Bank of Cochin Ltd. After the execution of Ext. B1, the Bank of Cochin Ltd. was amalgamated with the defendant bank by virtue of Section 45(4) of the Banking Regulation Act. Admittedly the amalgamation was effected as per the scheme formulated by the Reserve Bank of India by virtue of the said amalgamation. The rights and liabilities of the transferor bank were taken over by the transferee bank. The case of the defendant is that after amalgamation, the defendant bank sent Ext. A8 notice to the plaintiff terminating the tenancy with effect from 31-12-1985. Thereafter the defendant again sent Ext. A12 notice informing that the building will be vacated on 31-3-1986. As per the agreement, the plaintiff is not liable to take possession of the building before the expiry of the lease period. There is no dispute with regard to the fact that the building was taken on rent by the Bank of Cochin Ltd. for a period of 20 years. Only after the expiry of the agreed period, the lessor shall be entitled to have the premises vacated after issuing three months notice. According to the plaintiff, the parties are bound by the agreement and as per the terms, the plaintiff need to take vacant possession of the building only after the expiry of the lease period of 20 years from the date of Ext. B1. As per Section 106 of the Transfer of Property Act, in the absence of a contract CRP NO.456 OF 2019

or local law or usage to the contrary a lease of immovable property otherwise for agricultural or manufacturing purposes shall be deemed to be from month to month terminable on the part of either lesser or lessee by 15 days notice expiring with the end of a month of the tenancy. Here there is a written contract between the parties that the tenancy shall be terminated only after the expiry of 20 years. The specific case of the plaintiff is that the building was constructed in a remote area for the purpose of letting out to the bank for the residence of the Manager of the Bank. It is not disputed by the plaintiff that the Bank of Cochin Ltd. was amalgamated with the State Bank of India as per Section 45(4) of the Banking Regulations Act, 1949. It is true that as per the said Regulation, the rights and liability of the Cochin Bank Ltd., devolved on the State Bank of India. The averment in the plaint shows that the building was taken on rent for the residence of the Manager of the Cochin Bank Ltd. Since, the said Bank has been amalgamated with the State Bank of India, the contract has become incapable of performance. If the contract is broken the plaintiff can sue for for damages. The defendant has no case that after 31-5-1985 any rent was paid to the plaintiff. Ext. B1 agreement is signed by the Chairman of the Bank of Cochin Ltd.

5. Ext. A6 is the copy of the Gazette notification dated 23-8-1985 notifying the amalgamation scheme. As per the amalgamation, all rights, powers, claims, demands, interests, authorities, benefits, assets and properties of the transferred Bank movable and immovable including CRP NO.456 OF 2019

premises subject to all incidents of tenure and to the rents and other sums of money and covenants reserved by or constrained in the lease or agreements under which they are held shall stand transferred to and become the properties and assets of the transferee. In the light of Ext. A6, the defendant cannot contend that the agreement between the plaintiff and the erstwhile Cochin Bank Ltd. will not bind the defendant. But in the instant case, the contract has become incapable of performance. The building was taken on rent for the residence of the then Manager of the Bank. Due to the amalgamation, the agreement has become incapable of performance.

6. Before this court, the plaintiff has produced the copy of the appeal memorandum filed by the defendant before the Appellate Authority (R.C.) as R.C.A. No. 41 /1991. The contention of the defendant is that the lease has been terminated as per Ext. All. It is submitted by learned counsel for the plaintiff that for fixation of fair rent, the appellant has filed R.C.P. No. 3/1990 before the Rent Control Court, Thrissur which was dismissed against which the defendant filed R.C.A. No. 41/1991 before the Appellate Authority (R.C.A.), Thrissur. So according to the respondent the tenancy was subsisting even after the alleged surrender. This argument of the learned counsel cannot be accepted since the defendant has surrendered the key along with the written statement. Hence it is clear that now the building is not used by the defendant. So at the most it can be stated that the defendant has committed breach of contract. If it be so the remedy CRP NO.456 OF 2019

open to the plaintiff is to sue for damages.

Since the defendant has surrendered the key before the court, this Court cannot compel the defendant to occupy the buildings. Both the courts below did not consider this aspect. In such circumstances, it is to be found that the judgment and decree passed by the courts below are perverse and hence the judgment and decree are liable to be set aside. But I make it clear that the dismissal of the suit is not a bar to claim damages for breach of contract. The period by which the plaintiff was prosecuting the suil and continuous proceedings shall be exempted for the purpose of limitation. The plaintiff seek appropriate remedy within three months from the date of this judgment.

The second appeal is allowed with the abovesaid observation.

8.14. Relying on the above he submits that there

is no lock-in period in the Lease, mere fact

that the Lease is for a period of 10 years

does not take away the right to terminate

the Lease during the said period of 10

years unless there is a bar on the Lessee or

Lessor to terminate the Lease.

CRP NO.456 OF 2019

8.15. The Lease gets terminated by the issuance

of notice of termination; at the time of

termination, delivery of possession is not

required. In the present case, the

Petitioner having refused to receive the

keys, the Respondent has filed an

application before the trial Court to place

the keys in the custody of the trial Court.

Therefore, he submits that once a notice

under Section 111(h) has been issued, the

termination is complete. In this regard, he

relied upon the decision in the case of

Credit Corporation Limited -v- Happy

Homes (P) [AIR 1968 SC 471]

paragraph 9 which is reproduced hereunder

for easy reference:

"9. We are unable to agree with counsel for the Respondent that in order to determine a tenancy under the Transfer of Property Act at the instance of a CRP NO.456 OF 2019

tenant. There must be actual delivery of possession before the tenancy is effectively determined. That contention is contrary to the plain terms of S. 111 (h) of the Transfer of Property Act. We are therefore of the opinion that by virtue of the notice dated August 12, 1953, and acceptance L 10 Sup CI/68-3 thereof by the landlord, the tenancy of Allen Berry was determined at 3-30 P.m. on August 31, 1953. It is unnecessary in that view to consider whether the notice dated February 20, 1954, requiring Allen Berry to vacate and deliver possession of the premises to the landlord on expiry of March 31, 1954, was a valid notice."

8.16. Learned counsel submits that the lease

deed was executed for purpose of running

a school for children between age of 1 to

10 years, due to repeated floods a portion

of the leased premises had sunk, there was

a short circuit and safety of children and

life of staff were at stake, hence, parents of

the children threatened to withdraw their

wards. In this background, leased

premises became substantially and

permanently unfit for the purpose for which CRP NO.456 OF 2019

it was let out constraining the respondents

to determine the Lease which cannot be

faulted with, in which regard he relies upon

the decision in Thomas -v- Moram Mar

Baselious Ougen [1979 SCC Online

Kerala 3], more particularly paragraphs

10 and 11 thereof which are reproduced

hereunder for easy reference:

"10. As the learned counsel for the appellant pointed out the doctrine of frustration embodied in Section 56 of the Indian Contract Act which renders a contract void by reason of the impossibility of performing the act required on account of some event which the promissor could not prevent, would not apply in the case of a lease. The rights of the parties after a lease was granted rest not in contract. Though under Section 4 of the T. P. Act, the chapters and sections of the said Act relating to contracts are to be taken as part of Indian Contract Act, that does not mean that the provisions of the Contract Act are to be read into the T. P. Act. See Dhruv Dev v. Harmohinder Singh (AIR 1968 SC 1024). As this decision lays down there is a clear distinction between a completed conveyance and an executory contract, and events which discharge a contract do not invalidate a CRP NO.456 OF 2019

concluded transfer. By its express terms Section 56 of the Contract Act does not apply to cases in which there is a completed transfer as in the case of a concluded lease. A covenant under a lease to do an act which after the contract is made, becomes impossible or by reason of some event which the promissor could not prevent, unlawful, becomes void, but on that account the transfer of property resulting from the Lease granted by the Lessor to the Lessee is not declared void. Therefore, by the destruction of the building the Lease cannot be said to have become void and thus discharged. One must also note from the Supreme Court decision cited supra, that Section 56 of the Contract Act must be considered to be exhaustive of the law relating to frustration of contracts in India and the courts cannot travel outside the terms of that section in the matter. Clause (e) of Section 108 is in the following terms:--

"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 of 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."

10. As Justice Namboodiripad, if I may say so with respect, rightly pointed out in George v. Varghese (1976 Ker LT 859) it is presumably to avoid a contingency of CRP NO.456 OF 2019

the Lessee being fastened with the liability of payment of rent even if a material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purpose for which it was let. that the tenant is conferred an option by Section 108 (e) to treat the contract as void. That does not mean that in a case where the subject matter of the Lease like the building here is totally destroyed, the tenant is entitled to squat on the ground where the building was situate or construct a new building in its place or require the landlord to put up a new structure."

8.17. Learned counsel submits that on issuance

of notice under Section 111(h) of the

Transfer of Property Act, Lease has been

determined. Determination has not been

challenged by the Petitioner. What has

only been sought for is recovery of security

deposit. With such declaration being

sought for, determination has taken effect.

Determination not being challenged, no

rent is required to be paid.

CRP NO.456 OF 2019

9. In rejoinder Sri. C.M.Nagabushan, learned

counsel would submit that

9.1. There is no particular averment made to

support the contention that the Lease has

been terminated in terms of Section 108

(e).

9.2. The averment in the plaint as regards the

property has been rendered substantially

and unfit for the purpose for which it was

let, there being no exercise of powers

under Section 108(e) of the T.P. Act either

in the notice of termination and/or in

plaint, the question of invoking the same

during the course of arguments would not

arise. Therefore, the issue being raised now

for the first time cannot be permitted to be

raised.

CRP NO.456 OF 2019

9.3. On all the aforesaid, he once again

reiterates the prayer of allowing the

application under Order 7 Rule 11 of CPC

and rejection of the plaint.

10. Heard Sri.C.M.Nagabushana, learned counsel for

the Petitioner and Sri P.N. Manmohan, learned

counsel for the Respondent and perused the

petition papers.

11. On the basis of the above, the points that would

arise for the determination by this Court are:

1. Whether the Lessor or Lessee can terminate a registered lease for a specific period, even when the Lessee does not provide for to termination of the Lease?

2. If a lease is terminated without such power or authority being provided in the lease deed would it amount to no cause of action to file a suit for recovery of deposit amount?

3. Whether a determination of a lease without authority can be said to be one without cause of action under Order VII CRP NO.456 OF 2019

Rule 11(a) of CPC requiring the rejection of the plaint?

4. Whether the exercise of rights under Section 108(e) of the TP Act a notice determining the Lease has to specifically refer to the requirements under the said provisions?

5. Whether in terms of Section 111(h) of the TP Act both the parties are provided right to terminate the Lease even though the Lease is of the specified period?

6. What order?

12. ANSWER TO POINT NO.1: Whether the Lessor or Lessee can terminate a registered lease for a specific period, even when the Lessee does not provide for to termination of the Lease?

12.1. Lease is defined under Section 105 of the

T.P. Act. The said Section is reproduced

hereunder for easy reference:

"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, CRP NO.456 OF 2019

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."

12.2. A lease therefore is a transfer of a right to

enjoy a property made for a certain time

express or implied or in perpetuity. Thus,

if a document under which Lease has been

executed, it is the terms of the said

document which would govern the parties.

In the present case, the Lease is in terms

of the Lease Deed dated 1.04.2016 which

is a registered document executed by the

petitioner-land owner in favour of the

respondent-tenant, the period of Lease is

ten years as contained in the recital and

first covenant of the Lease. The same is

reproduced hereunder for easy reference:

Now THEREFORE THIS DEED WITNESSES that in pursuance of the aforesaid agreement and in consideration of the rent herein reserved and of CRP NO.456 OF 2019

the covenants on the part of the lessees hereinafter contained the Lessor hereby demises by way of Lease unto Lessees the schedule property for a period of 10 years form today on the following terms and conditions.

1. That the said lessees have undertaken to pay the lessor monthly rent for the schedule property at all following rates by cheques on or before the 10th day of each calendar month during the lease period of 10 years:

1 1/4/2016 to 31/8/2016 Rs.1,17,128-00

2 1/9/2016 to 31/8/2018 Rs.1,75,000-00

3 1/9/2018 to 31/8/2020 Rs.1,92,500-00

4 1/9/2020 to 31/8/2022 Rs.2,11,750-00

5 1/9/2022 to 31/8/2024 Rs.2,32,925-00

6 1/9/2024 to 31/3/2026 Rs.2,56,218-00

12.3. The only clause which provides for

termination of the Lease is Clause (6)

which is reproduced hereunder for easy

reference:

CRP NO.456 OF 2019

"6. That whenever any part of the rent shall be in arrears for two months, after due date or there shall be a breach of any of the covenants by the lessees herein, the Lessor shall have the right to re-enter the schedule property and determine the Lease."

12.4. Apart from these two clauses, there is no

other clause which relates to either the

term or termination of the Lease.

Therefore, it is only with reference to the

above two clauses that it would have to be

examined as to for what period the Lease

is. The extracted portion of the recital and

covenant No.1 would categorically establish

that Lease is for a period of 10 years. The

rentals to be paid for the entire ten years in

different blocks of ten years has also been

agreed upon between the parties, the time

of such payment has also been clearly

mentioned. Thus, in my considered opinion

the Lease is for a specified period of ten

years.

CRP NO.456 OF 2019

12.5. Clause (6) extracted above provides a right

to the Lessor to re-enter the schedule

property and determine the Lease if there

is a breach by the Lessee in payment of

rent for a period of two months. Thus, it is

only the Lessor who can exercise the right

to determine the Lease. This right would

also cease in the event of the Lessee

making payment of the defaulted payments

within the notice period.

12.6. There is no similar clause in the Lease

which entitles the Lessee to terminate or

determine the Lease. A lease having come

into being under a contract and being a

creation of contract, it is the terms of the

contract which would govern all aspects of

the Lease. The decisions relied upon by

Sri.K.N.Manmohan, learned Counsel for the CRP NO.456 OF 2019

respondent in M.Shankaran's, SBI vs.

William's and Happy Home cases are not

applicable to the present facts and

circumstances of the case if they do not

tally with the situation where the points

formulated hereinabove and/or the

situation where the lease being for a

specific period has been terminated.

12.7. In the present case, the Lease being for a

specified period of ten years and the Lease

being determinable by the Lessor, only on

account of the Lessee being in arrears of

rentals for a period of two months, the

Lease cannot be determined for any other

reason by any of the parties. It is clear

that the Lessee has not been conferred

with any right to terminate the Lease under

the lease deed. The agreement having CRP NO.456 OF 2019

been entered into between the parties and

registered, the parties are bound by the

terms and covenants thereof.

12.8. Hence, I answer point No.1 by holding that

neither the Lessee nor Lessor can

terminate a registered lease for a specific

period when the Lease does not provide for

such termination. A lease could only be

terminated in terms of the contract and not

otherwise.

13. ANSWER TO POINT NO.2: If a lease is terminated without such power or authority being provided in the lease deed would it amount to no cause of action to file a suit for recovery of deposit amount?

13.1. As answered point no.1 above, if there is

no power to determine a lease, and

Lessee were to determine a lease, the

said determination is nonest. This being a

pure appreciation of a particular term of a CRP NO.456 OF 2019

contract would not require any trial to be

held. A person who cannot determine a

contract cannot sue for recovery of any

deposit made under a contract which

cannot be determined by such person.

Exfacie if the Lease as in this case does

not permit the plaintiff-lessee to

terminate the Lease, then the question of

plaintiff-lessee terminating the Lease and

suing for recovery of deposit amount

would not at all arise. The plaintiff-lessee

would have no cause of action to file such

a suit.

13.2. Hence, I answer point No.2 by holding

that if a lease is terminated without power

or authority under the lease deed, there

would be no cause of action for such CRP NO.456 OF 2019

person who terminates the Lease to sue

for recovery of deposit amounts.

14. ANSWER TO POINT NO.3: Whether a determination of a lease without authority can be said to be one without cause of action under Order VII Rule 11(a) of CPC requiring the rejection of the plaint?

14.1. As answered to points No.1 and 2, when a

lease cannot be determined by a lessee

and there being no cause of action for the

Lessee to sue for recovery of deposits, the

same would come within the purview of

Order VII Rule 11(a) of CPC and as such, I

answer point NO.3 by holding that the

Court dealing with such a matter could

exercise powers under Order VII Rule 11(a)

of CPC to reject the plaint.

14.2. The decisions in Mayar and Kamala's

cases relied upon by Shri Manmohan, the

learned Counsel for the Respondents, CRP NO.456 OF 2019

would not apply since there is no trial

which is required, the matter being a pure

question of law, i.e., whether the Lessee

could terminate the Lease or not.

15. ANSWER TO POINT NO.4: Whether the exercise of rights under Section 108(e) of the TP Act a notice determining the Lease has to specifically refer to the requirements under the said provisions?

15.1. Section 108 of T.P. Act reads as under:

108. Rights and liabilities of Lessor and lessee.-- In the absence of a contract or local usage to the contrary, the Lessor and the Lessee of immoveable 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:--

(A) Rights and Liabilities of the Lessor

(a) The Lessor is bound to disclose to the Lessee any material defect in the property, with reference to its intended use, of which the former is and the latter is not aware, and which the latter could not with ordinary care discover;

(b) the Lessor is bound on the Lessee's request to put him in possession of the property;

(c) the Lessor shall be deemed to contract with the Lessee that, if the latter pays the rent reserved by the Lease and performs the contracts binding on the Lessee, he may hold CRP NO.456 OF 2019

the property during the time limited by the Lease without interruption.

The benefit of such contract shall be annexed to and go with the Lessee's interest as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested.

(B) Rights and Liabilities of the Lessee

(d) If during the continuance of the Lease any accession is made to the property, such accession (subject to the law relating to alluvion for the time being in force) shall be deemed to be comprised in the Lease;

(e) if by fire, tempest or flood, or violence of an 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 of 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;

(f) if the Lessor neglects to make, within a reasonable time after notice, any repairs which he is bound to make to the property, the Lessee may make the same himself, and deduct the expense of such repairs with interest from the rent, or otherwise recover it from the Lessor;

(g) if the Lessor neglects to make any payment which he is bound to make, and which, if not made by him, is recoverable from the Lessee or against the property, the Lessee may make such payment himself, and deduct it with CRP NO.456 OF 2019

interest from the rent, or otherwise recover it from the Lessor;

(h) the Lessee may even after the determination of the lease remove, at any time whilst he is in possession of the property leased but not afterwards all things which he has attached to the earth; provided he leaves the property in the state in which he received it;

(i) when a lease of uncertain duration determines by any means except the fault of the Lessee, he or his legal representative is entitled to all the crops planted or sown by the Lessee and growing upon the property when the Lease determines, and to free ingress and egress to gather and carry them;

(j) the Lessee may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. The Lessee shall not, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the Lease;

Nothing in this clause shall be deemed to authorise a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the Lessee of an estate under the management of a Court of Wards, to assign his interest as such tenant, farmer or Lessee;

(k) the Lessee is bound to disclose to the Lessor any fact as to the nature or extent of the interest which the Lessee is about to take, of which the Lessee is, and the Lessor is not, aware, and which materially increases the value of such interest;

CRP NO.456 OF 2019

(l) the Lessee is bound to pay or tender, at the proper time and place, the premium or rent to the Lessor or his agent in this behalf;

(m) the Lessee is bound to keep, and on the termination of the Lease to restore, the property in as good condition as it was in at the time when he was put in possession, subject only to the changes caused by reasonable wear and tear or irresistible force, and to allow the Lessor and his agents, at all reasonable times during the term, to enter upon the property and inspect the condition thereof and give or leave notice of any defect in such condition; and, when such defect has been caused by any act or default on the part of the Lessee, his servants or agents, he is bound to make it good within three months after such notice has been given or left;

(n) if the Lessee becomes aware of any proceeding to recover the property or any part thereof, or of any encroachment made upon, or any interference with, the Lessor's rights concerning such property, he is bound to give, with reasonable diligence, notice thereof to the Lessor;

(o) the Lessee may use the property and its products (if any) as a person of ordinary prudence would use them if they were his own; but he must not use, or permit another to use, the property for a purpose other than that for which it was leased, or fell or sell timber, pull down or damage buildings belonging to the Lessor, or work mines or quarries not open when the Lease was granted, or commit any other act which is destructive or permanently injurious thereto;

(p) he must not, without the Lessor's consent, erect on the property any permanent structure, except for agricultural purposes;

CRP NO.456 OF 2019

(q) on the determination of the Lease, the Lessee is bound to put the Lessor into possession of the property.

15.2. A reading of the above would clearly

establish that it is only in the absence of

contract or legal usage to the contrary,

the Lessor and the Lessee of immovable

property as against one another would

possess rights and liabilities as stated

therein. Thus if there is a contract, it is

the contract that will govern the

relationship and Section 108 cannot be

read into a lease.

15.3. In the present case, there is a contract

between the parties. In terms of the

contract, the term of the Lease is for a

period of ten years as afore stated. In

view thereof, Section 108 of the T.P. Act CRP NO.456 OF 2019

would not apply to the present fact

situation.

15.4. Even otherwise, if the right under Section

108(e) is required to be exercised, the

Lessee would have to allege the same in

the Notice issued alleging that the

material part of the property is destroyed

or rendered substantially or permanently

unfit for the purposes for which it was let

out. The same would entail a clear

detailing of the event, description of the

material part of the property, destruction

thereof, as also the unfitness of the same

for the purposes for which it was let. The

Lessee therefore is required to advert to

all the above in furtherance of exercise of

right under Section 108-(e) of the T.P.Act.

CRP NO.456 OF 2019

15.5. In the present case, there is no such

exercise resorted to by the plaintiff while

determining the tenancy. Even in the

plaint in O.S. No.4239/2018, it is only

stated that necessary steps have to be

taken at the earliest. Thus, it is not that

the premises had become unfit or

permanently unfit for use. It is only that

certain steps were to be taken in terms of

clause (7) of the Lease which reads as

under:

"7. If during the lease period, any repairs or maintenance work is to be done, the lessees hereby undertake to attend to such repairs and maintenance at their own cost and keep the schedule property in a reasonably good condition and deliver vacant possession of the same to the Lessor on the expiry of the lease period or on the termination of the lease whichever is earlier."

CRP NO.456 OF 2019

15.6. It is for the Lessee to undertake repairs or

maintenance work at its own cost. In the

present case, I am of the considered

opinion that firstly Section 108 including

Section 108(e) of the T.P.Act are not

attracted. Assuming but not conceding

that the same is attracted, the plaintiff

has not satisfied the requirement of

Section 108(e) of the T.P.Act. Therefore

there is no cause of action to file the

subject suit.

15.7. I answer Point No.4 by holding that

for the exercise of rights under

Section 108(e) of the TP Act a notice

determining the Lease has to

specifically refer to the requirements

under the said provision.

CRP NO.456 OF 2019

16. ANSWER TO POINT NO.5: Whether in terms of Section 111(h) of the TP Act both the parties are provided right to terminate the Lease even though the Lease is for a specified period?

16.1. The contention of Sri.P.N.Manmohan,

learned counsel for the Respondent, is that

a lease could always be terminated by

issuance of a notice determining the Lease

informing the intention to quit or of

intention to quit the property.

16.2. In my considered opinion for either Lessor

or Lessee to issue a notice to determine the

Lease, such right, power or authority has to

be derived from the contents of the lease

deed. If the lease deed were not to

provide for a right, power or authority to

determine a lease, no party can determine

the Lease and the Lease would only come

to an end by efflux of time upon the CRP NO.456 OF 2019

completion of the period of demise under

the lease deed.

16.3. In the present case, the period of Lease

being fixed as ten years and there being no

right vested in the Lessee to determine the

Lease and the Lessor's right to determine

the Lease being restricted only to a

situation where there is two months

default, I am of the considered opinion that

Section 111(h) is not attracted in the

present case and no notice could have been

issued by the Lessee plaintiff to determine

the Lease in the manner done. This again

being a question of law would not require

trial.

16.4. Hence, I answer point No.5 by holding

that any right under Section 111(h) of the CRP NO.456 OF 2019

T.P.Act to determine a lease would have

to be exercised in consonance with the

covenants and agreement contained in

the lease deed and not otherwise.

Section 111(h) does not independently

provide a right to any of the parties to a

lease to terminate a lease. If that be the

case, then there would be no purpose

served by entering into a lease for a

specified period and registering the same

by making payment of stamp duty and

registration fee for that period. Once the

parties have agreed to be bound by the

terms of the Lease, the term of the Lease

would be sacrosanct irrespective of

circumstances that may arise.

CRP NO.456 OF 2019

17. ANSWER TO POINT NO.6: What order ?

17.1. In view of the finding and answers to

points above, the order dated 23.09.2019

passed by the LX Addl. City Civil and

Sessions Judge (CCH-61), Bangalore on

I.A. No.2 under Order VII Rule 11 of CPC

is set aside.