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H.V. Rajan Vs. C.N. Gopal and ors. - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtKarnataka High Court
Decided On
Case NumberAppeal No. 263 of 1954
Judge
Reported inAIR1961Kant29; AIR1961Mys29; ILR1960KAR151
ActsTransfer of Property Act, 1882 - Sections 105; Specific Relief Act, 1877 - Sections 12; Evidence Act, 1872 - Sections 91; Mysore House Rent and Accommodation Control Act, 1951 - Sections 2(2), 2(9), 7, 7(3) and 8; Indian Contract Act, 1872 - Sections 32 and 56; Mysore House Rent and Accommodation Control Order, 1948
AppellantH.V. Rajan
RespondentC.N. Gopal and ors.
Appellant AdvocateM.K. Srinivasa Iyengar, Adv.
Respondent AdvocateK.R. Gopivallabha Iyengar, ;V. Krishna Murthy and ;H.V. Narayana Rao, Advs.
Excerpt:
tenancy - damages - mysore house rent and accommodation control act, 1951 - whether plaintiff can claim damages from defendant - it is for plaintiff to prove quantum of damages claimed by him - court did not believe evidences put up by plaintiff - besides plaintiff put forward many false contentions - thus plaintiff cannot claimed damages from defendant - appeal dismissed. - karnataka value added tax act, 2003 [k.a. no. 30/2005] section 35 (1): [d.v.shylendra kumar,j] failure to file periodic return and the tax within the permitted time stipulated under penalty levied under section 72 (1) challenge as to - declaration sought to declare that the provision of sub-section (1) of section 72 of the act is unconstitutional, being violative of articles 14 and 19 of the constitution of.....hegde, j.1. the plaintiff appeals against the dismissal of his suit i.e., original suit no. 52 of 1950-51 in the court of the first additional district judge, bangalore. the facts of the case are fully set out in the judgment of the trial court. there is no need to repeat the same. we shall briefly state the facts relevant for the decision of the points at controversy in this court.2. the first defendant is the owner of the 'moviland theatre' (suit property). he leased out the same on 29-12-1941 as per exhibit l (which is also marked as exhibit ix). for the purpose of this case we may take it that the second defendant in this suit is the lessee thereunder. the lease was for a period of five years and in the ordinary course, it was to expire at the end of february 1947. as per exhibit iv.....
Judgment:

Hegde, J.

1. The plaintiff appeals against the dismissal of his suit i.e., Original Suit No. 52 of 1950-51 in the Court of the First Additional District Judge, Bangalore. The facts of the case are fully set out in the judgment of the trial Court. There is no need to repeat the same. We shall briefly state the facts relevant for the decision of the points at controversy in this Court.

2. The first defendant is the owner of the 'Moviland Theatre' (suit property). He leased out the same on 29-12-1941 as per Exhibit L (which is also marked as Exhibit IX). For the purpose of this case we may take it that the second defendant in this suit is the lessee thereunder. The lease was for a period of five years and in the ordinary course, it was to expire at the end of February 1947. As per Exhibit IV dated 2-5-1946, the first defendant demanded possession of the leased property on the termination of the lease.

But the second defendant as per Exhibit V sought a renewal of the lease, as per Clause 14 in Exhibit L. After exchange of letters Exhibits IV and V, the first defendant leased the 'Moviland Theatre' to the plaintiff as per Exhibit D dated 2-9-1946. The lease was to commence on the termination of the then existing lease in favour of the second defendant. As per Clause 2 of Exhibit D. the rent for the suit property

'shall bo payable with effect from the date on which possession of the theatre is made over to the tenant by the landlord, who shall, if necessary, take such steps as may be required to obtain and deliver possession to the tenant as soon as possible.'

As the second defendant refused to deliver possession of the suit property on 1-5-1947, the first defendant instituted O. S. No. 112/46-47 on the file of the learned Principal Subordinate Judge, Bangalore, for possession of the same.

The trial Court gave a decree for possession but declined to give a decree for mesne profits. Both the plaintiff as well as the defendants appealed to the High Court against that decree. The appeal filed by the second defendant was numbered as N. A. No. 217/48-49 in the file of the High Court of Mysore. During the pendency of those appeals the first defendant and the second defendant compromised their disputes. In pursuance of that compromise, the second defendant executed a fresh lease deed in favour of the first defendant, agreeing to pay rent at a rate very much higher than that stipulated in Exhibit L.

After the said compromise, the first defendant credited on 21-8-1950, a sum of Rs. 21,432-6-0 to the account of the plaintiff in the Bank of Mysore, Ltd., at its head office in Bangalore. It may be noted that at the time of the execution of Exhibit D, and in pursuance of its terms, the plaintiff had paid a sum of Rs. 18,000/- to the first defendant as premium. The first defendant purported to refund that sum of Rs. 18,000/- along with interest thereon at 4 1/2 %, when he credited the sum of Rs. 21432-6-0, to the account of the plaintiff.

After some correspondence between the plaintiff and the first defendant, the plaintiff returned that sum to the first defendant and thereafter instituted the present suit praying for the following reliefs: (i) Specific Performance of the agreement dated 2-9-1946 (Ex. B); (ii) directing the defendants to deliver possession of the suit property; (iii) directing an enquiry into the mesne profits in respect of the suit property from the date of suit upto the elate of delivery of possession and directing the defendants to pay the same to the plaintiff; (iv) for interest, costs and such other reliefs as the Court may deem fit to grant under the circumstances of the case; in the alternative he claimed as damages a sum of Rs. 6,00,000/- together with interest thereon from the date of suit to date of decree at 6% per annum and with future interest thereon from the date of the decree.

3. The second defendant resisted the plaintiff's suit for possession on various grounds, out of which only three Were pressed before us. They are: (i) that the lease Exhibit L in his favour has been duly renewed and as such he was entitled to be in possession during the renewed period; (ii) that he has become a statutory tenant of the suit property as per the terms of the Mysore House Rent Control Orders and Acts. Consequently he cannot be evicted except in accordance with the provisions contained therein; (iii) the compromise entered into by him and the first defendant is a bona fide compromise of a doubtful claim and as such the same is binding on the plaintiff.

4. The first defendant also had resisted the plaintiff's suit on numerous grounds. Many of them are irrelevant and were not pressed before us. But the grounds pressed before us are; (i) the agreement Ex. D is vitiated by mutual mistakes; (ii) the said agreement is a contingent agreement The contingency having not arisen, the agreement cannot be enforced; (iii) the agreement is frustrated as a result of the Mysore House Rent Control Orders and Acts, (iv) the plaintiff is estopped from having recourse to Exhibit D in view of the fact that he had utilised the amount of Rs. 21,432/6 deposited to his credit in the Bank of Mysore, Ltd. We shall proceed to examine the respective contentions of the first and the-second defendants.

5. In the Court below, there was some controversy as regards the true character of Ex. D. But in this Court all the parties are agreed, which we think is the true position in law, that Ex. D is an 'agreement of lease' and not art 'agreement to lease'. In other words as per Ex. D, there was a demise in presenti. The fact that the property demised was to he delivered to the possession of the lessee at a subsequent date is irrelevant for the purpose of determining whether the agreement in question represents a lease nr not. See, Narayanan Chetty v. Muthiah Servai, ILR 35 Mad 63 (FB); Sultanali Mulla Rasoolji v. Tyeb Pir Mahomed, AIR 1930 Bom 210; Ramjoo Mahomed v. Haridas Mullick, : AIR1925Cal1087 .

As per Section 105 of the Transfer of Property Act, delivery of possession of the property demised is not a condition precedent for coming into operation of a lease. In view of Ex. D, the plaintiff had obtained an interest in the property leased and he was entitled to sue for possession of the same on his own right, if there were no other legal impediments. That being so, the suit for specific performance is misconceived, even if it is maintainable.

The proper relief was to sue for possession and the plaintiff has done so in this case. Hence it is unnecessary to consider the desirability of granting a decree for specific performance. Similarly the second defendant's plea that the compromises entered into between him and the first defendant, Exhibits T and U (in the course of the appeals against the decree in O. S. No. 112 of 1946-47) bar the plaintiff's claim for possession, is equally unsustainable. The plaintiff is not a party to the compromises in question.

Any compromise entered into between the first and the second defendants cannot affect the rights of the plaintiff. His rights which have accrued to him on 1-3-1947 will have to be examined on their own merits unaffected by Exhibits T and U. While considering the true character of Ex. D, the Trial Court has extensively relied on the oral evidence adduced by the parties. To the extent the terms of a contract are clear and unambiguous, aliened evidence bearing on the construction of any of the terms of the contract are inadmissible and should not have been looked into.

6. This takes us to the renewal clause i. e. Clause 3rd of Ex. L. The second defendant claims that the lease in his favour stood duly renewed on 1-3-1947 for a further period of 5 years as per the renewal clause. The said clause reads :

'After the expiry of the period of 5 years fixed under this lease the lessees shall have the option of 5 years but subject only to such terms and conditions as may be mutually agreed upon.'

The parties are at controversy as regards the true meaning of this clause. According to the plaintiff, the clause means that the lessor and the lessee may choose to renew the lease if they are able to agree on the terms. In other words he contends that it was merely an agreement to negotiate for a fresh lease. Ordinarily the renewal clause in a lease deed is an important term of the agreement. Courts will be reluctant to ignore that clause on the ground that it is vague, unless on a reasonable construction no meaning can be attached to it.

We think that the parties to Ex. L did attach some meaning to that clause. What then is its import? One way of reading this clause is, that the parties had agreed to renew the lease, for a further period of five years in accordance with the original terms, unless otherwise modified by mutual agreement. The relevant portion of the clause says : 'the lessees shall have the option of five years but subject only to such terms and conditions as may be mutually agreed upon.' An agreement to renew the lease without more must he deemed to be an agreement to renew as per the original terms.

This appears to us to be a reasonable interpretation to be placed on Clause 14 of Ex. L. Even if we agree with the plaintiffs contention that the renewal provided is dependent on the agreement between the parties on other terms, on the basis of decided cases, we have no hesitation in reading that clause as providing for an agreement between the parties on terms reasonable. If the parties are at variance as to those terms then the Courts will step in. See Robinson v. Thames Mead Park Estate) Ltd. (1947) 1 Ch 334, Foley v. Classique Coaches' Ltd., (1934) 2 KB 1; Killas and Co. Ltd. v. Arcos Ltd., 1932-147 LT 503; Jardine, Skinner and Co. v. Rani Surat Sundari Debi, 5 Ind App 164 (PC); Prodyot Commar Tagore v. Maynuddin Mia, AIR 1938 Cal 724. Authorities on this point can be multiplied. But we see no necessity for it.

7. The next and the more formidable objection taken by the second defendant in resisting the plaintiff's suit for possession is that he has become a statutory tenant under the provisions of the Mysore House Rent and Accommodation Control Orders and Acts. There is no dispute that under the provisions of the law both at the time of the institution of the present suit as well as now, Cinema Theatres are not excluded from the mischief of the House Rent and Accommodation Control Act, 1951.

Under Section 8 of the Mysore House Rent and Accommodation Control Act, 1951, no tenant can he evicted whether in execution of a decree or otherwise, notwithstanding anything contained in any agreement or law to the contrary, excepting in accordance with the provisions of that section or Section 7 (3) of the same act. A landlord who seeks to evict a tenant in possession, will have to apply to the Court as defined in Section 2(2) of the Act. The Courts constituted under the Mysore House Rent and Accommodation Control Act, have exclusive jurisdiction to deal with the matter,

Hence in the present suit, the plaintiff cannot seek to evict the second defendant if he can he deemed to he a tenant in the suit property. As per the definition of 'tenant' found in Sub-section (9) of Section 2 of the Mysore House Rent and Accommodation Control Act, 1951, which was the Act in force at the time of the disposal of the present suit by the Court below, 'tenant' means any person on whose account rent is payable for a house and includes a person continuing in possession after the termination of the tenancy in his favour.

Even if we agree with the plaintiff that the second defendant's tenancy had expired at the end of February 1947, still the second defendant must be deemed to be a statutory tenant under . the Mysore House Rent and Accommodation Control Act and his eviction can be effected only in accordance with the provisions of that Act. The protection afforded by that Act as amended by later Acts continues to exist even at present. It was repeatedly held by the former Mysore High Court as well as by this Court that the provisions governing the eviction of tenants are retrospective in effect and further they oust the jurisdiction of the Civil Courts altogether. For these reasons we think that the plaintiffs suit for possession of the suit property cannot be sustained.

8. This leaves us with the question whether the plaintiff can claim any damages from the first defendant, if so, what is the quantum of damages to which he is entitled? In the plaint, the plaintiff has claimed Rs. 6,00,000/- an damages from all the defendants. No principle of law is shown to us on the basis of which the second defendant could be made liable to pay any damages to the plaintiff. He had made no agreement with the plaintiff which could give rise to any cause of action for damages.

Nor is it shown that he is guilty of any tort. The foundation for the claim for damages is that the first defendant has committed a breach of the agreement made by him in Ex. D to deliver possession of the suit property 'as soon as possible after the termination of the tenancy of the second defendant if necessary by taking such steps as may be required to obtain and deliver possession'. As mentioned earlier, the first defendant contends that this agreement is a contingent agreement, the contingency being his right to get possession from the second defendant.

He contends that the contingency having not happened nor likely to happen in the foreseeable future the agreement has become void or at any rate the agreement cannot be enforced at present. Clause 2 of Ex. D is in absolute terms. The liability of the first defendant to deliver possession of the property leased, is not made dependant on the first defendant getting possession of the suit property from the second defendant.

Moreover it is seen from the evidence of D. W. 2 (B. T. Ramaswamy) who is the brother-in-law of the first defendant, that he had advised both the plaintiff as well as the first defendant that it is not safe to ignore Clause 14 in Ex. L as the Courts may consider it as an enforceable clause. This is also the effect of the evidence Of the first defendant himself. In spite of that the first defendant had chosen to enter into an agreement undertaking to deliver possession of the suit property unconditionally. It is difficult to interpret such an agreement as a contingent agreement. The language employed in Clause 2 of Ex. D is opposed to that contention. Nor does the evidence adduced support the same.

9. Similarly the first defendant's plea that Ex. D Is void because of mutual mistake is without substance. From the admissions made by the first defendant as well as from other evidence in the case, it is clear that the parties to Ex. D knew the possibility of the renewal clause being enforced and in spite of that they took the risk of entering into the agreement in question. Hence there can be no question of any mistake much less mutual mistake. Moreover the mutual mistake pleaded in this case is a mistake regarding the true legal effect of the renewal clause. Such a mistake even if true, cannot invalidate the contract.

10. Last and the most important plea taken by the first defendant in resisting the plaintiff's claim for damages is that the contract (Ex. D) has become frustrated because of the changes made in the Mysore House Rent and Accommodation Control Orders and Acts. At the time when the contract under Ex. L was entered into, places of .entertainment (including Cinema Theatres) were Outside the scope of the Mysore House Rent and Accommodation Control Order in force at that time. But that Order was amended in 1948.

As per the amended Order 'Cinema Theatres' were also included within the definition of 'house' and as a result of that, the Cinema Theatres also came within its regulatory powers. This fact is not disputed. In view of this change in the law which the parties could not have anticipated at the time oi' the execution of Ex. D, it is contended, that the agreement has become frustrated. Clause 9(1) of the Mysore House Rent and Accommodation Control Order, 1948 provided that a tenant in possession of 3 house should not be evicted therefrom whether in execution of a decree or otherwise except in accordance with the provisions of that clause.

The landlord who wanted to evict a tenant in possession had to apply to the Controller for a direction in that behalf, and the Controller could give the direction in question if the facts of the case fell within one or the Other of the grounds mentioned in that clause. According to the first defendant none of the grounds mentioned in Clause 9(1) would have been of any assistance to him to evict the second defendant. It is true that Clause 19 of that Order provided :

'Nothing In this Order shall prevent a landlord from filing a suit for eviction of a tenant before a competent Civil Court, provided that no decree for eviction of a tenant, passed by a Civil Court shall be executed unless a certificate to that effect is obtained from the Controller.'

This clause was removed when the 1951 House Rent and Accommodation Control Act was passed. Even under Clause 16 of the 1948 Order, it is reasonable to assume that the discretion given to the Controller would have been exercised only in accordance with the provisions contained in Clause 9. Hence Clause 16 could not have assisted the 1st defendant to evict the 2nd defendant. Moreover by the time he was able to get a decree for possession, the 1951 Act had come into force and as such there was no further loophole. Hence it is urged that the agreement in Ex. D has become void in view of the change in the law.

11. Numerous decisions both English and Indian had been cited before us for ascertaining the true scope of the doctrine of 'frustration'. We do not think it necessary for the purpose of deciding the points at issue in this case, to travel outside Section 56 of the Indian Contract Act. We have greatly profited by the English decisions cited at the Bar, but there is no need to refer to them as it is now well settled by the decision of the Supreme Court in Satyabrata Ghose v. Mugneeram Bangui and Co., : AIR1954SC44 , that:

'in deciding cases in India, the only doctrine that we have to go by is that of supervening impossibility Or illegality as laid down in Section 56, taking the word 'impossible' in its practical and not literal sense.'

Their Lordships have further laid down:

'In cases, where the Court gathers as a matter of construction that the contract itself contained Impliedly or expressly a term according to which it would stand discharged on the happening of certain circumstances the dissolution of the contract would take place under the terms of the contract itself and such cases would be outside the purview of Section 56 altogether. ....They would be dealt with under Section 32 which deals with contingent contracts or similar other provisions contained in the Act. In the large majority of cases, however, the doctrine of frustration is applied not on the ground that the parties themselves agreed to an implied term which operated to release them from the performance of the contract. The relief is given by the Court on the ground of subsequent impossibility when it finds that the whole purpose Or basis of a contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was beyond what was contemplated by the parties at the time when they entered into the agreement. .....When such an event or change of circumstance occurs which is so fundamental as to be regarded by law as striking at the root of the contract as a whole, it is the Court which can pronounce the contract to be frustrated and at an end. The Court has undoubtedly to examine the contract and the circumstances under which it was made. The belief, knowledge, and intention of the parties are evidence, but evidence only on which the Court has to form its own conclusion whether the changed circumstances destroyed altogether the basis of the adventure and its underlying object. .....This is really a rule of positive law and as such comes within the purview of Section 56 of the Contract Act.'

According to their Lordships, the word 'impossible has not been used in the sense of physical or literal impossibility. The performance of an act may not be literally impossible but it may be impracticable and useless from the point of view of the object and purpose which the parties had in view; and if an untoward event or change of circumstance totally upsets the very foundation upon which the parties rested their bargain, it can very well be said that the promisor finds it impossible to do the act which he promised to do.

Applying these principles to the facts of the present case, there is little doubt that the change made in the Mysore House Rent and Accommodation Control Orders and Acts has struck at the root of the contract embodied in Ex. D. This change could not have keen in the contemplation of the parties at the time when they entered into the agreement. For all practical purposes, it Is clear that it is impossible for the 1st defendant, to evict the 2nd defendant within any reasonable time. Accommodation Controls are still in force and no one knows how long they will be continued.

Hence the agreement between the parties though lawfully entered into and was in the course of operation, has been prematurely determined owing to the occurrence of an intervening event or changed circumstance so fundamental as to be regarded by law both as striking at the root of the agreement and as entirely beyond what was contemplated by the parties, when they entered into the agreement. This intervening circumstance operates to bring the agreement to an end as regards both the parties and apart from their volition.

12. In view of our decision that the agreement between the plaintiff and the 1st defendant, has become frustrated, it is unnecessary to go into the question of damages. But since the parties have argued this matter before us at some length, we think it appropriate to pronounce on the same. In the suit, the plaintiff has claimed a sum of Rs. 6,00,000/- as damages, the basis for this claim being that, if the contract had seen fulfilled, he would have made a monthly profit of Rs. 2,500/- and that for a period of 20 years. This appears to us to be an ambitious claim.

It is for the plaintiff to prove the quantum of damages claimed by him and that by satisfactory evidence. We are not unaware of the difficulties of the plaintiffs in these cases. But still the requirements of the law will have to be met. The plaintiff has examined P. Ws. 1 to 5, who are in some manner connected with the Cinema Theatres, to show that Cinema Theatres in Bangalore are making huge profits. Evidence of this type is not of much assistance. What the plaintiff had to prove is that he would have made a monthly profit of Rs. 2500/- or more if the contract had been fulfilled.

Success in Cinema shows, as in many other businesses, depends on various factors such as the location of the theatre, its equipment, chances of getting good pictures, the ability of the management to advertise, so on and so forth. We do not believe that one has only to take a cinema theatre on lease in Bangalore to build up a huge bank balance. So the proof that some of the owners of cinema theatres have made profits is not very relevant. In this view, we have not gone into the details of the evidence adduced by the plaintiff, though the learned counsel appearing for the 1st defendant had a great deal to say against the evidence given by these witnesses.

The 2nd defendant has got himself examined. He has produced his account books. These accounts, if true and it is not shown that they are not true, show that between 30-6-1949 and 30-6-1950, he had incurred a loss of Rs. 22,910-6-2, in the suit theatre. Similarly, in 1951 he had incurred a loss of Rs. 11,554-6-9. It may be that those years were particularly lean years. But it still shows that things are uncertain even in cinema show business. Hence we do not think that the evidence adduced in this case is of much assistance in arriving at the quantum of damages.

But if we had held that there was a breach of contract, we would have awarded the plaintiff name damages. Taking into consideration the several circumstances appearing in this case, particularly the enhanced rate of rent at which the 1st defendant had let out the building to the 2nd defendant as per Ex. VII (rent fixed under Ex. D is Rs. 1500/- per month, whereas the tent fixed under Ex. VII is Rs. 1800 /- per month), we would have awarded the plaintiff damages in a sum of Rs. 25,000/- (Twentyfive thousand).

13. One thing remains to be considered. At the time of the execution of Ex. D, the plaintiff had paid an advance of Rs. 18.000/- to the 1st defendant. This money remained with the 1st defendant till 21-8-1950. On that day the 1st defendant credited a sum of Rs. 21,432-6-0 to the account of the plaintiff in the Bank of Mysore, Ltd., at its head office. He also intimated this fact to the plaintiff as per Ex. F. According to the 1st defendant this sum of Rs. 21,432-6-0 represented the advance of Rs. 18,000/- with interest thereon up to 21-8-1950. The plaintiff returned that amount on 4-9-1950. The 1st defendant has adduced evidence in this case to show that the amount in question was deposited as agreed to by the plaintiff.

We are satisfied that this is a wholly false version. The 1st defendant had the benefit of the use of that money ever since 2-9-1946 till now except for a very small period. Now that it has been held that the contract under Ex. D is void, the 1st defendant is bound to return the money advanced. He is also liable to pay reasonable interest thereon. It is contended on behalf of the 1st defendant that he is not liable to pay any interest on that amount from 21-8-1950, as the plaintiff had unreasonably returned the money de-posited to his credit. We do not think that this contention can be accepted. The case put forward by the 1st defendant on this point has been disbelieved. In this case, the 1st defendant is not free from blame.

After agreeing to lease the theatre to the plaintiff at a monthly rental of Rs. 1500/-, he has managed to enter into an agreement with the 2nd defendant under which the rent for the suit theatre was enhanced to Rs. 1800/- per month. Thus be makes a clean profit of Rs. 300/- per month. It is evident that he has entered into thin agreement behind the back of the plaintiff. He has received advantage under a contract which has become void. Hence this is a fit case where we should direct the 1st defendant to refund the sum of Rs. 18,000/- with interest thereon at 6 (six) per cent per annum from 2-9-1946 till the date of deposit.

14. Now coming to the question of costs, we have negatived most of the contentions advanced by the 1st defendant. The plaintiff's suit against him has failed only because of the House Rent and Accommodation Control legislations. In this case the conduct of the 1st defendant is not above hoard. He has put forward many false contentions. Hence there is no justification in awarding him costs either in this Court or in the trial Court. Similarly, the 2nd defendant, after knowing full well about Ex. D, has entered into collusive compromises and a lease deed with the 1st defendant. In the circumstances of this case, we think, we are justified in disallowing costs of the defendants both in this Court and in the Court below.

15. With the modifications above suggested, the appeal is dismissed.

16. Appeal dismissed.


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