1. On an application made to the district Munsif-cum-Rent Controller, Visakapatnam in H. R. C. No. 38 of 1965, the eviction of the tenant was ordered. From that decision, an appeal was preferred by the tenant to the appellate authority. The appeal succeeded and the order of eviction was set aside . In this revision petition the landlords challenge the validity of the conclusions of the Subordinate Judge, who disposed of the appeal as the appellate authority under the relevant statute.
2. There was an earlier proceeding for eviction instituted in the year 1958. The application was allowed by the Rent Controller and in an appeal preferred to the Subordinate Judge, Visakapatnam, in C. M. A. No. 8 of 1960, the Appellate Authority came to the conclusion that the tenant was allowed to run a hotel in the premises and therefore, the rule of estoppel prevented the landlords from recovering possession of the house for their residence. Although the Subordinate Judge came to the conclusion that the that the landlords required the house bona fide for their residence, the application for eviction was rejected because the landlords were precluded from using the house as residence. There was a revision petition preferred by the landlords from C. M. A. No. 8 of 1960 but the Revision Petition C. R.P. No. 1 of 1963 on the file of the District Court was withdrawn. As a result of the withdrawal, the revision petition was dismissed on 8-10-1963. About two months later, the landlords who withdrew the revision petition conveyed their interest in the property to one Kuchibhotal Subrahmanya Sastry. The transaction is evidenced by Ex. A-1 dated 10-12-1063.
3. The purchaser thereupon initiated the present proceeding for eviction alleging inter alia that the tenant had agreed to attorn to him and that as the landlord owns no other residential house, he requires the demised premises for his personal occupation. Other grounds have also been urged in supported of the petitioner for eviction , viz., that the house is in a dilapidated condition and that the house is in a dilapidated condition and that it is necessary to demolish it and put up a new structure. The tenant resisted the petition. The Rent Controller allowed the petition for eviction but the Subordinate Judge acting as the Appellate Authority under the Act allowed the tenant's appeal and it is the latter order that is the subject-matter of this revision petition. The legal representatives of the landlord continued the proceedings after the latter's death.
4. Although the Appellate Authority has upheld the plea of the landlords that the buildings is required for personal occupation, the application for eviction dismissed because the finding in the prior proceedings that the building was non-residential is held to be conclusive.
5. The main point urged on behalf of the petitioners is that the Appellate Authority's view that the earlier finding is conclusive's view that the earlier finds is conclusive is erroneous. It is urged that the landlords withdrew the revision petition and that there was no final adjudication on the question whether the building was residential or not. For the respondent, it is submitted that the finding in the prior proceeding operates as res judicata and that the application for eviction is incompetent because a tenant occupying a building for business purposes cannot be evicted to make the premises available for the landlord's residence.
6. The conclusion that there was a finding which operates as res judicata appears to me to be unsustainable. The view taken by the Subordinate Judge in C. M. A. No. 8 of 1960 is expressed in these terms:
'It is for the landlord to prove the purpose for which the premises was leased out and its violation. Even if it was not intended at the time of leasing out that the premises would be used for running a hotel, the conduct of Venkataswamy and the present petitioners in allowing the tenant to run a hotel for twenty years amounts to an estoppel. Even in the notices Exs. R-1 and R-2, the petitioners never raised the plea that the building was not leased out for a hotel. I find the point in favour of the tenant.'
From the above extract, it is clear that it was because of the application of the rule of estoppel that the landlords' plea for eviction failed. The effect of this finding has been canvassed by the learned counsel for the petitioners. He submits that the withdrawal of the application for eviction by the landlords who suffered from the disability of estoppel is not tantamount to an adjudication that the building has ceased to be residential or was let out for a business purposes. On a perusal of the finding there can be no doubt that it was not the terms of the initial letting but it was the rule of estoppel that operated as a bar to the landlord's claim for possession f the house. The finding cannot be construed to mean that there was a decision adverse to the landlords about the nature of the building being non-residential or that the letting was specifically for the use of the building for business.
7. The tittle of the present landlords being derived under a transfer inter vivos, the point for consideration is whether the rule of estoppel which prevailed on the previous occasion can be resorted to by the tenant to defeat the present claim of the successors-in-interest. The answer in my opinion must be in favour of the landlords. The crucial question is whether the building has shed its character as residential in character if the letting itself is expressly for a purpose which is not residential. No residential building can be converted as a non-residential building except with the permission of the Controller. It is not the case of the respondent that a lawful conversion in conformity with the statutory provisions has taken place. In the eye of law, the residential nature of the building has not been affected.
8. The omission of the landlords to object to the user of the premises for purposes not in consonance with the agreed user does not invariably erect an estoppel. A breach of covenant in regard to the user of the building is a continuing breach. Any acquiescence in the breach or the receipt of rent with knowledge of such breach will constitute a waiver upto the time of the acceptance of the rent or the acquiescence in the user. If the landlord does not take exception to the user but acquiesces in the breach, it does not constitute a sanction irrevocably given to the changed user of the premises at a later period. or for all time to come.
9. The facts here are that, after the finding that the landlords were estopped by reason of their acquiescence from recovering possession of the premises was rendered, they filed a revision petition but withdrew it and thereafter the property was sold. There is nothing to indicate was after the purpose of the property, the transferee had acquiesced, in the breach on the part of the tenant. The building itself retained its original character, there being no change as laid down by the statute. The disability of the landlords to obtain possession of the premises arose put of their own conduct. There is, therefore, no legal impediment to any succeeding landlord applying for eviction on the ground that the premises in question do not cease to be residential in character and that there is a breach of the covenant which brings the case within the mischief of Section 10 (2) of the Act so long as there is no written consent given by the landlord sanctioning the use of the building for a purpose other than that for which it was leased.
10. The tenant does not acquire any right to put the building to the changed user as against the landlord unless so permitted by written consent. The fact that on an earlier occasion the landlords in whom the title then inhered were precluded by reason of the rule of estoppel from obtaining eviction of the tenant is no bar to the present application for eviction. The question the Controller has to ask himself is; Is there a written consent of the landlords which irrevocably affords a sanction for the new user. If the answer is in the affirmative, it follows that the tenant has obtained a right in derogation of which no plea for eviction can be made either by the landlord that has given a written consent or a successor-in-interest. If there is no written consent which alone can make a changed user legitimate, the landlord who is not subjected to the rule of the estoppel suffers from no disability. He can validly sustain a petition for eviction on grounds allowed by law.
11. When a tenant resists a petition for eviction on the ground that the building has ceased to be residential in character, a two-fold approach to the question becomes necessary. Firstly, the Controller has to consider whether conversion did take place as allowed by law (vide Section 18 of Act 15 of 1960). If such a conversion has taken place, the effect of it is absolute and the inquiry whether the landlord permitted the user for a non-residential purpose is irrelevant. Secondly, even in the absence of a conversion in the manner ordained by law, it may be that, the landlord, by his conduct has forfeited his right to recover the premises for use as residence. This disability is personal and stems out of the rule of estoppel. It is the conduct of the landlord that results in the erection of a barrier although there is neither a change in the character of the building nor a written consent, sanctioning the user of the premises in a manner at variance with the initial understanding.
12. In the second category, the disability arising out of estoppel does not impair the rights of a successor-in-interest. It is manifest that in any even the estoppel does not survive beyond the lifetime of the person estopped.
13. The finding of the lower Court that there is a conclusive adjudication in a former proceeding is untenable. But it is submitted that there is a categorical finding on merits whereby the appellate authority negatived the contention of the landlord that the building retains its character as residential premises. In coming to this conclusion the appellate authority relied on certain statements in the evidence of R.W. 1 that even prior to his lease the building was let out for purposes other than use as residence. This circumstances even if true, is not of decisive importance. As long as there is no conversion in conformity with Section 18, the precise terms of letting or written permission to vary the use will have to be established before a landlord is denied possession of the premises for his residence. It is held that the landlord requires the building for his residence but that the relief cannot be granted because the building has been used for purposes of business. There is indubitable evidence that the tenant is residing in the very premises apart from using them as a hotel for serving food to customers. What then was the predominant object of the letting? Was it for both purposes? Or was the user as hotel unauthorised?
14. I am not satisfied that the appellate authority had sufficient basis for holding that the 'dominant purpose for which the building is used to run a meals hotel for business purposes.' What is the justification for the view that the dominant purpose was the one rather than the other? On this aspect of judgment of the appellate authority is open to severe criticism. The fact that the building is situate in a 'busy or commercial locality' does not afford a satisfactory criterion.
15. The finding rests on a prior considerations and lacks substantive basis. In view of the clear admission that the tenant has continued to reside in the premises, there must be positive proof of the dominant or main purpose of the letting. The appellate authority has not chosen to refer to any data to support its finding about the dominant purpose of the letting. The finding cannot be said to be proper and I am of opinion that the case calls for a fur the investigation.
16. Accordingly, the cases is remanded to the appellate authority for a fresh disposal of the appeal in the light of the observations made above. If the appellate authority considers it necessary it may direct the parties to adduce further evidence. The appellate authority will not determine whether there was an understanding between the lessor and the lessee at the time of the original letting that the dominant purpose of the lease was that the building was to be used as a hotel. The parties will bear their respective costs in this revision petition. The revision petition is allowed accordingly.
17. Revision allowed.