1. The legality of the order of the Licensing Authority under the Karnataka Cinemas (Regulation) Act, 1964 (hereinafter referred to as 'the Act') refusing to regrant the cinematograph licence to the petitioner, on the ground that the possession of the petitioner of the building in which she has been exhibiting the cinematograph films and the equipment, is not lawful and the order of the appellate authority confirming the order of the Licensing Authority is questioned by the petitioner in this writ petition.
2. The petitioner became the lessee of the premises together with equipments meant for exhibiting cinematograph films, called IMPERIAL TALKIES situate in the City of Bangalore. The People's Charity Fund, a Trust registered under the Trust Act, is the owner, and lessors of the aforesaid building and equipments. After the expiry of the earlier period of leases of the same premises and equipment, the latest lease which is relevant for this case came into existence through a registered deed dated 12-12-1962. The period of lease was fixed at 15 years, on a monthly rent of Rs. 1,450/ and was due to expire on 11-12-1977. Even before the expiry of the lease period, the 1st respondent filed a Civil Suit against the petitioner for eviction on the ground of breach of covenant by sub-letting. The suit was dismissed by the trial Court, but was decreed by the appellate Court and the second appeal, R. S. A. 802/73, filed by the petitioner is pending before this Court. Even as the said second appeal is pending, the period of lease itself came to an end on 11-12-1977.
3. In the lease deed (Exhibit-A) there is a renewal clause in para (i) (b) of the deed, which reads as follows :
'On the expiry of the period of lease specified here-in-before and in respect of any new lease, the Lessors may enter into at that time, the Lessors are agreeable to give first priority to the Lessees' application for fresh lease provided the Lessees agree to the terms and conditions of the Lessors to be stipulated at that time.'
4. About six months prior to the expiry of the lease period, with the intention of seeking renewal of the lease for a further period, a letter dated 13th June 1977 was addressed on behalf of the petitioner to the 1st respondent (Exhibit-B) and the same reads as follows :
'As you are aware, the above referred premises is leased to us and we have been in occupation of the same for more than two decades. The present lease expires on 12th Dec. 1977. Due to the addition of several cinema houses in Bangalore equipped with modern amenities such as air-cooling etc., the competition has increased tremendously. The distributors of foreign films are not inclined to screen first-class pictures in our premises due to the inadequate facilities. In order to procure first-class pictures it is absolutely essential that we modernise the theatre including providing air conditioning or air-cooling plants. This obviously involves investment of money running into several lakhs of rupees. We, on our part, are agreeable to make this investment provided we are given renewal of the lease for a period of 15 years with the option to renew for a further period of 15 years. The lease period requested for is absolutely essential in order to recover our investment for modernising the theatre. As you know, we have been paying monthly rent of Rs. 1,450/- and we are agreeable to enhance the rent to Rs. 2,500/- per month with effect from 12th Dec. 1977 for the next 15 years and Rs. 4,000/- per month after the expiry of first 15 years.
We hope you will consider our proposal favourably and request you to kindly let us have your confirmation as early as possible.'
To the said letter the 1st respondent sent a reply on 18th Aug. 1977 (Ex. C). The entire case of the petitioner is based on the said letter, the contents of which are as follows:
'This is to acknowledge receipt of your letter dated 13th June 1977 pertaining to the lease of the New Imperial Cinema at 23, Residency Road, Bangalore-25. At the outset, we have to point out that our lessees are the Legal Representatives of the Estate of late Mr. S. V. Margan, represented by Smt. Thayararnrnal, Mr. S. V. Viswanathan and late Mr. S. V. Subramanian and not as stated by you.
While adverting to your proposal for the lease of the above cinema, after the expiry of the existing lease, please be informed that in this connection we have on hand a number of proposals from various parties with reasonable offers, for the lease of the same theatre on the expiry of the existing lease. As such your proposal shall be taken up for consideration in due course.
However, you are advised that if you wish to pursue this matter further, you may, if you so desire get in touch with our Trustee Sri R. Swaminathan who is now in Bangalore.
We shall await to hear from him in tha above.
Thanking you once again for your proposal.'
Thereafter the 1st respondent issued a notice of termination of the lease to the petitioner with effect from 11-12-1977 and asked them to vacate and deliver possession on 12-12-1977. In the said notice the 1st respondent, inter alia, categorically stated that the Trust has decided to run the theatre themselves.
5. In this situation, as the cinematograph licence issued to the petitioner was due to expire by the end of Dec. 1977 the petitioner applied for the regrant of the licence, for a further period of one year, on 30th Nov. 1977, before the Deputy Commissioner and the District Magistrate, Bangalore District, who is the Licensing Authority for the grant or regrant of licence under the Act. Rule 6 of the Rules framed under the Act, which is relevant for this case, reads as follows:
'6. Records relating to ownership or possession to site, building or equipment to be produced.
If the applicant for licence is the owner of the site, building or equipment he shall produce before the licensing authority necessary records relating to his ownership and possession. If he is not the owner, he shall produce to the satisfaction of the licensing authority, documentary evidence in proof of his lawful possession of the site, building or equipment.
6. As the petitioner is not the owner of the building and the equipment the 2nd respondent proceeded to consider as to whether the possession of the building and equipment by the petitioner on or after 12-12-1977 is lawful as that is the requisite condition for the regrant of licence. The 1st respondent relying on the decision of the Supreme Court in M. C. Chokalingam v. V. Manickavasagarn : 2SCR143 held that the possession by the petitioner of the building and equipment was not lawful and accordingly by his order dated 28th Dec. 1977 refused to regrant the licence to the petitioner.
7. The petitioner preferred an appeal to the Divisional Commissioner, Bangalore (3rd respondent), who is the appellate authority under the Act against the order passed by the 1st respondent under the Act under Section 10 of the Act read with Rule 114 of the Rules. The said appeal was dismissed by the 3rd respondent by his order dated 7th Jan. 1978 (Exhibit-E).
8. Aggrieved by the aforesaid orders the petitioner has presented this writ petition praying for the issue of writ of certiorari against the orders of 2nd and 3rd respondents and also for the issue of consequential direction to the said respondents directing the regrant of the licence.
9. Sri K. K. Venugopal, learned counsel for the petitioner, urged the following contentions :
(1) The impugned order suffers from patent error of law in that, there has been no consideration of the documents (Exhibits A, B and C) on the basis of which the petitioner claimed the possession of the building and equipment as lawful and without doing so the ratio of the decision of the Supreme Court was mechanically applied, though the case of the petitioner was clearly distinguishable from the said case; and,
(2) In view of the renewal clause contained in the lease deed (Exhibit-A), together with the letter addressed by the petitioner (Exhibit-B) and the reply of the 1st respondent (Exhibit-C) the possession of the building and equipment by the petitioner is lawful, as the petitioner acquired a right for renewal of the lease, and could also seek specific performance of the contract for renewal of the lease.
10. Elaborating the first contention, the learned Advocate for the petitioner, criticised that in the order of the 3rd respondent he has mechanically set out in extenso the grounds urged by the petitioner but in the portion of the order in which he has considered the case of the petitioner, there is no reference to the two letters exchanged between the parties (Exhibits B and C) and the stand taken by the petitioner on the basis of those letters. He submitted that the effect of these documents as contended by the petitioner before the appellate authority was that the petitioner has secured a right to continue in the premises or in any event entitled to compel the petitioner to renew the lease, by filing a suit for specific performance, and this aspect clearly distinguishes the case of the petitioner from the Supreme Court case : 2SCR143 , but the appellate authority failed to consider these documents and to notice the distinguishing feature of this case and proceeded to dismiss the appeal.
11. The Supreme Court decision on which respondents 2 and 3 relied on to reject the application of the petitioner for regrant of licence was a case which arose under the provisions of the Madras Cinematograph Act and the Rules framed thereunder. Rule 13 of the Madras Rules provided that in order to claim grant or regrant of Cinematograph Licenses, the applicant not being the owner should establish that his possession of the concerned building and/or equipment was 'lawful.' In the said case, the applicant for regrant of Cinematograph licence was a lessee of the building and equipment who was continuing in possession after the termination of the lease. The Supreme Court held that his possession was unlawful rejecting the contention that his possession was lawful until he was evicted from the building in accordance with law. The relevant portion of the judgment is found at para 15 which reads as follows:
'Turning to Rule 13, even in the first part if the applicant for the licence is the owner of the property he has to produce before the licensing authority the necessary records not only relating to his ownership but also regarding his possession It is implicit, that the owner having a title to the property, if he can satisfy the licensing authority with regard to his possession also, will indeed be in 'lawful possession' although the word 'lawful' is not used in the first part. It is in that context that the word 'possession' is even not necessary to be qualified by lawful in the first part of Rule 13. If, however, the applicant for the licence is not the owner, there is no question of his showing title to the property and the only requirement of the law is to produce to the satisfaction of the authority documentary evidence with regard to his lawful possession of the property. The word 'lawful,' therefore, naturally assumes significance in the second part while it was not even necessary in the first part. The fact that after expiry of the lease the tenant will be able to continue in possession of the property by resisting a suit for eviction, does not establish a case in law to answer the requirement of lawful possession of the property within the meaning of Rule 13. Lawful possession cannot be established without the concomitant existence of a lawful relationship between the landlord and the tenant. This relationship cannot be established against the consent of the landlord, unless, however, in view of a special law, his consent becomes irrelevant. Lawful possession is not litigious possession and must have some foundation in a legal right to possess the property which cannot be equated with a temporary right to enforce recovery of the property in case a person is wrongfully or forcibly dispossessed from it. This Court in Lallu Yeshwant Singh's case, (AIR 1968 SC 620) had not to consider whether juridical possession in that case was also lawful possession. We are clearly of opinion that juridical possession is possession protected by law against wrongful dispossession but cannot per se always be equated with lawful possession.'
The petitioner, however, tried to distinguish his case from the Supreme Court case before the Divisional Commissioner on the basis of Para I (b) of the Lease Deed which contains a renewal clause and the offer made by the petitioner to have the lease renewed in the letter dated 13th June 1977 (Exhibit-B) and the reply dated 18th Aug. 1977 (Exhibit-C) by the 1st respondent in which according to the petitioner there was the clearest indication that the 1st respondent had decided to lease the building and equipment after 12-12-1977 and therefore having regard to the first priority available to the petitioner under the renewal clause, the offer of the petitioner had to be accepted. The Divisional Commissioner has fully set out the written arguments submitted before him on the above lines in his order and also the renewal clause in the lease deed and thereafter proceeded to consider his case and stated in para 13 of his order as follows:
'It will be seen from the wordings of the covenant that in the event of lessors agreeing to lease the property, first priority should be given to the lessee (the appellant herein). In the event of sale, the first option should go to the appellant. To read more than this into the covenant may not be very correct. It is accepted by both the parties that time fixed for the lease period is 15 years and the same has already elapsed. The lessor (the respondent herein) has not agreed to allow the lessee (the appellant herein) to continue in the premises under the terms and conditions of the agreement. Neither there is any fresh lease in favour of the appellant. In these circumstances, it cannot be considered that the appellant is in lawful possession of the building, as required under the rules. The facts and the law enunciated in various decisions referred to and relied upon by the appellant are not relevant to the facts of this case. In these circumstances it cannot be said that the documentary evidence produced by the appellant is beyond ambiguity. What is required is the satisfaction of the licensing authority as to the lawful possession, The Licensing Authority has come to the conclusion that the possession of the property by the appellant is litigious in nature and the very history of the case and also the reading to the documentary evidence produced by the appellant makes it clear that the possession is litigious in nature and cannot be said to be a satisfactory lawful possession. In these circumstances, I do not find any reason to interfere with the orders of the learned District Magistrate and accordingly I uphold the same. In the result, the appeal is dismissed.'
12. From the above portion of the order, it is clear that the Divisional Commissioner came to the conclusion that all that the relevant clause in the lease deed provided was that in the event of the Lessor (1st respondent) deciding to lease the building, the lessee should get first priority and as lessor has not agreed to lease and as admittedly the lease period has expired, the petitioner's possession is not lawful. It is no doubt true that there is no specific reference to the contents of the letters (Exhibits B and C) in the aforesaid portion of the order, but there is specific reference to the renewal clause. Further the written arguments based on those documents have been fully set out in the earlier part of the order, and the 3rd respondent has come to the conclusion on the basis of these documents that there is no fresh lease or renewal of the lease beyond 12-12-1977. Therefore, I am unable to accept the first contention of the petitioner.
13. As regards the second contention the first submission of the petitioner is based on renewal clause in the lease deed and the, letter dated 13th June 1977 (Exhibit-B) and the reply sent by the 1st respondent dated 18th Aug. 1977 (Exhibit-C). The learned counsel for the Petitioner submitted that by virtue of these documents a clear contract came into existence between the petitioner and the 1st respondent for the renewal of the lease and the petitioner is in a position to enforce the specific performance of the said contract and, therefore, the possession of the petitioner could not have been termed to be not lawful. He pointed out that in the Supreme Court case there was no renewal clause, and therefore this case is clearly distinguishable from the said case.
14. A reading of the relevant clause in the lease deed and the two letters which are fully set out earlier will clearly show that there is no substance in this submission of the petitioner. Under the said renewal clause no right is given to the petitioner to claim renewal as of right, at her discretion. According to the renewal clause, if only the 1st respondent decided to give the premises and equipment on lease after 12-12-1977, the petitioner is entitled to first priority, but if the lessors decided to run the cinema themselves and not to give on lease, the petitioner has no right to insist on the renewal of the lease. As the lease period was coming to a close, by letter dated 13th June 1977 (Exhibit-B) aforesaid the petitioner offered to take the building and equipment on lease for further period on payment of higher rents. According to the petitioner this offer was accepted in the reply dated 18th Aug, 1977 (Exhibit-C) or in any event the said letter clearly sets out the decision of the 1st respondent to give the building and equipment on lease after 12-12-1977 and therefore first priority for renewal of the lease accrued to the petitioner in terms of Clause (1) (b) of the lease deed. In the aforesaid letter of the 1st respondent, I am unable to see any decision on the part of the 1st respondent to lease the building in question after the expiry of the lease in favour of the petitioner in the said letter. On the other hand the letter indicates that there were offers by several persona to take the premises on lease including the proposal of the petitioner and they will all be taken up for consideration in due course. The letter does not in the least indicate that any decision had been taken by the 1st respondent to give the premises on lease after 12-12-1977. If only the 1st respondent had decided to give the premises on lease after 12-12-1977 and took up the proposal of all the persons for consideration, the petitioner could have insisted on his right for priority in view of the definite clause in the agreement. But no such decision was taken by the 1st respondent. On the other hand by notice dated 28-9-1977 (Exhibit R-1) the petitioner was informed of the definite intention of the 1st respondent to run the theatre by themselves and not to lease the same to the petitioner or any one else. The petitioner was called upon to deliver the possession of the premises before the midnight of 12-12-1077. Therefore, I do not find any substance in the submission of the petitioner that she had acquired any right for the renewal of the lease.
15. The second submission made on behalf of the petitioner in support of the second contention was that, there was no clause in the lease deed requiring the petitioner-lessee to put the 1st respondent-lesser in possession of the property after the expiry of the lease period and the absence of such a clause distinguishes this case from the Supreme Court case. I am not impressed by this submission. Once the period of lease is fixed, lessee is bound to put the lessor in possession of the leased property on the termination of the lease. Such a condition has to be read into the lease deed even in its absence in view of Section 108(q) of the Transfer of Property Act.
16. The third submission made by the learned counsel for the petitioner, in support of the second contention was, that the so called decision of the 1st respondent to run the cinema themselves was not bona fide and it was only with the object of depriving the right of priority for renewal and for evicting the petitioner from the premises, the 1st respondent has said so in the notice dated 28-9-1977 (Exhibit-1). He further submitted that if only the decision of the 1st respondent to run the theatre was bona fide, they could insist on the petitioner to deliver possession of the building and equipment to them and as the decision was not bona fide, the petitioner has the right to retain possession and compel the 1st respondent to renew the lease, in support of the submission the petitioner placed reliance on the following authorities -- (i) 1914 (1) K. B. 515; (ii) 1915 A.C. 42S; (iii) AIR 1928 Sind 137 at p. 139 and (iv) American jurisprudence Vol. 50; p. 60.
17. The above, plea was not raised before the Licensing Authority as is clear from the written submission dated 12-12-1977 made by the petitioner before that authority copy of which is produced by the 1st respondent along with memo dated 7-2-1978. This plea was taken in the appeal memo before the 3rd respondent. The 3rd respondent has not considered' this plea raised by the petitioner for the first time in the appeal, The same not having been raised before the Licensing Authority cannot be permitted to be raised in the writ petition.
18. Further I am of the opinion that even if there is any substance in the aforesaid submissions made on behalf of the petitioner in support of the second contention, it may only give rise to a cause of action for the petitioner for filing a suit for specific performance, but that does not in any way improve the position of the petitioner for this case. Even assuming that the petitioner hag a good case to file a suit for specific performance, and he files a suit for that purpose and secures a decree compelling the 1st respondent to execute lease deed in his favour and secures a lease deed pursuant to such a decree, the possession of the petitioner of the building and equipment after 12-12-1977 until such an event happens, would be clearly not lawful (See AIR 1916 Mad 1224 (1) and the decision of the Supreme Court in Chocklingam's case : 2SCR143 is applicable on all fours to this case. Hence, I reject the second contention of the petitioner also.
19. For the reasons aforesaid, the rule is discharged. The writ petition is dismissed with costs to the 1st respondent.Advocate's fee Rs. 500/-.
20. Petition dismissed.