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CASE NO.:

Appeal (civil) 3345-3349 of 1998

PETITIONER:

R.V.E. VENKATACHALA GOUNDER

Vs.

RESPONDENT:

VENKATESHA GUPTA & ORS.

DATE OF JUDGMENT: 09/04/2002

BENCH:

R.C. Lahoti & P. Venkatarama Reddi

JUDGMENT:

R.C. Lahoti, J.

The suit property consists of a building situated on

Easvarankoil Street of Tirupur city in the State of Tamil Nadu. There

are six tenants in the building and the portions in their occupation are

identified respectively as door Nos. 64, 64A, 64B, 64C, 64D and 64E.

Six petitions for evicting the tenants were filed before the Controller

on the ground available under clause (b) of sub-section (1) of Section

14 of The Tamil Nadu Building (Lease and Rent Control Act) 1960

(hereinafter the 'Act', for short) alleging that the building was bona

fide required by the landlord for the immediate purpose of

demolishing it and such demolition is to be made for the purpose of

erecting a new building on the site of the building sought to be

demolished. The tenants resisted the proceedings for eviction. One of

the pleas taken by them was that the land, on which the building

stood, belonged to Veeraragava Perumal and Visweswara temple and,

therefore, the question of the landlord reconstructing any building

over the land did not arise. However, this plea did not find favour

with the Controller and, at the stage of appeal, the plea was

specifically given up by the tenants. Similarly the landlord had sought

for eviction of the tenants also on the ground of the tenants being

wilful defaulters but that plea was given up by the landlord. What

survives for consideration is, therefore, solely the availability of

ground for eviction under Section 14(1)(b). The Controller negated

the availability of this ground for eviction. The landlord preferred six

appeals which were allowed and, in supersession of the order of the

Controller, the petitions for eviction were allowed and the tenants

were directed to be evicted. Out of six tenants, one has submitted to

the order of the appellate authority. Five tenants preferred civil

revision petitions before the High Court. The High Court has re-

appreciated the evidence and recorded a finding that the requirement

of the landlord could not be said to be bona fide and, by a common

order, directed the eviction petitions to be dismissed. The landlord

has filed these five appeals by special leave.

Sub-Section (1) and (2) of Section 14 and Sections 15 & 16 of

the Act, relevant for our purpose, read as under:-

"14. Recovery of possession by landlord

for repairs or for reconstruction.__

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(1) Notwithstanding anything contained in

this Act, but subject to the provisions of sections

12 and 13, on an application made by a landlord,

the Controller shall, if he is satisfied__

(a) that the building is bona fide required by the

landlord for carrying out repairs which cannot be

carried out without the building being vacated; or

(b) that the building is bona fide required by the

landlord for the immediate purpose of demolishing

it and such demolition is to be made for the

purpose of erection a new building on the site of

the building sought to be demolished, pass an

order directing the tenant to deliver possession of

the building to the landlord before a specified date.

(2) No order directing the tenant to

deliver possession of the building under this

section shall be passed__

(a) on the ground specified in clause (a) of sub-

section (1) unless the landlord gives an

undertaking that the building shall, on completion

of the repairs, be offered to the tenant, who

delivered possession in pursuance of an order

under sub-section (1) for his reoccupation before

the expiry of three months from the date of

recovery of possession by the landlord, or before

the expiry of such further period as the Controller

may, for reasons to be recorded in writing, allow;

or

(b) on the ground specified in clause (b) of sub-

section (1), unless the landlord gives an

undertaking that the work of demolishing any

material portion of the building shall be

substantially commenced by him not later than one

month and shall be completed before the expiry of

three months from the date he recovers possession

of the entire building or before the expiry of such

further period as the Controller may, for reasons to

be recorded in writing allow.

xxx xxx xxx xxx

xxx xxx xxx xxx

15. Tenant to re-occupy after repairs.__

(1) Where the landlord recovers possession

under clause (a) of sub-section (1) of Section 14,

he shall, within two months before the date on

which the work of repairs is likely to be

completed, give notice to the tenant of the date on

which the said work will be completed. Within

fifteen days from the date of receipt of such notice,

the tenant shall intimate to the landlord his

acceptance of the building offered for his re-

occupation and if the tenant gives such intimation,

the landlord shall within thirty days from the date

of completion of the work of repair put the tenant

in possession of the building on the original terms

and conditions. If the tenant fails to give such

intimation, his right to re-occupy the building shall

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terminate.

(2) If after the tenant has delivered

possession, the landlord fails to commence the

work of repairs within one month from the date of

such delivery, or fails to complete the work before

the expiry of three months from the date of such

delivery, or before the expiry of the further period

allowed under clause (a) of sub-section (2) of

section 14 or having completed the work fails to

put the tenant in possession of the building in

accordance with the provision of sub-section(1),

the Controller may, on the application of the tenant

made within thirty days from the date of such

failure, order the landlord to put the tenant in

possession of the building on the original terms

and conditions; and on such order being made, the

landlord and any person who may be in occupation

shall put the tenant in possession of the building.

16. Tenants to occupy if the building is

not demolished.__

(1) Where an order directing delivery of

possession has been passed by the Controller under

clause (b) of sub-section (1) of section 14 and the

work of demolishing any material portion of the

building has not been substantially commenced by

the landlord within the period of one month in

accordance with his undertaking under clause (b)

of sub-section (2) of section 14, the tenant may

give the landlord notice of his intention to occupy

the building the possession of which he delivered.

If within fifteen days from the date of receipt of

such notice, the landlord does not put him in

possession of buildings on the original terms and

conditions, the tenant may make an application to

the Controller within eight weeks of the date on

which he put the landlord in possession of the

building. The Controller shall order the landlord

to put the tenant in possession of the building on

the original terms and conditions.

(2) Where in a pursuance of an order passed

by the Controller under clause (b) of sub-section

(1) of section 14, any building is totally

demolished and a new building is erected in its

place, all the provisions of this Act shall cease to

apply to such new building for a period of five

years from the date on which the construction of

such new building is completed and notified to the

local authority concerned."

Before we may proceed to discuss the submissions on question

of law made by the learned counsel for the parties, we may briefly set

out the relevant facts to lay down the factual matrix on which the

submissions, on question of law, would stand. The building is

situated in the city of Tirupur which, as the appellate authority has

noted, is an industrial town and so far as the cloth business is

concerned the city is top-city of the State. Evidence was recorded

before the Controller in the year 1989. At that time the building was

30 years old. According to the landlord, the building was situated in

a business locality but was in a bad condition. The landlord wanted

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to reconstruct the building so as to augment his earnings. The

condition of the building, the plans for reconstruction submitted to the

Municipality and approved by it, are the facts stated in the notice,

served on the tenants, prior to invitation of proceedings for eviction.

According to the landlord, the building would be demolished

immediately and on godown being constructed at the site the landlord

would be able to earn rent at the rate of Rs.1.25p. per sq. feet. The

landlord also stated that a portion of the newly constructed building

would be utilized for the personal use and occupation of the landlord

and if any portion was left out as being in excess of the personal

requirement of the landlord then the landlord was willing to let out the

same to the tenants at the rate of Rs.1.50p. per sq. feet. The building

proposed to be constructed was a double-storey building on which an

amount of Rs.6 lakhs was likely to be spent. The landlord tendered

documentary evidence showing that approximately an amount of Rs.9

lakhs was available with the landlord in the bank accounts. One of the

tenants, namely Venkatesa Guptha, RW1 admitted in his deposition

that the suit premises were situated in an important business locality

of Tirupur. The building was constructed with stones, bricks and

mortar and was not required to be demolished. However, during

cross-examination, he admitted that the front portion of the building

was covered with cement sheets and back portion was covered with

tiles. There was also some un-constructed portion of the property

lying at the back. Subbarayan, RW3 admitted that though the

building was not dilapidated and damaged, yet, if a building on all the

land was constructed, then it would fetch more rental income. The

tenants offered that even without new construction they were prepared

to pay rent at the rate of Rs.1.25p. per sq. feet in the present condition

of the building.

Thus, on a broad conspectus, the situation which emerges is

that out of the total property of the landlord, part is lying

unconstructed and part is constructed. The constructed portion is

covered with asbestos sheets or tiles used as roof. The property is

valuable as situated in busy business locality. The building was about

30 years old by the year 1989. If reconstructed, obviously the

building would be double-storeyed, a modern building of cement

concrete and would admittedly fetch more rental income apart from

satisfying some personal need of the landlord. The appellate authority

considered all the evidence and relevant circumstances of the case and

arrived at a finding that the requirement of the landlord was bona fide.

These findings have been reversed by the High Court mainly on the

ground, as the judgment of the High Court reveals, that as the tenants

were prepared to pay Rs.1.25p. per sq. feet by way of rent in respect

of the existing accommodation, the question of reconstructing the

building for the purpose of augmenting earnings of the landlord, and

that too after spending Rs.6 lakhs, did not arise. The High Court

observed that merely because the landlord was having sufficient funds

and had got the plans of proposed reconstruction approved, the Court

could not order eviction.

In this Court, it is submitted by the learned counsel for the

landlord-appellant that a finding on the question of bona fides of the

landlord is basically a finding of fact which, having been arrived at by

the appellate authority on the consideration of all the relevant facts

and circumstances of the case, was not liable to be interfered with in

exercise of revisional jurisdiction of the High Court. The learned

counsel pointed out those relevant aspects of the case which were not

adverted to by the High Court, rendering the judgment of the High

Court infirm, with which we will deal with a little later. The learned

counsel for the respondents-tenants submitted, on the other hand, that

the real purpose of the landlord is to get rid of the tenants and not to

reconstruct the property. The learned counsel pointed out a serious

lacuna in the Act and submitted that after securing orders of eviction

if the landlord demolishes the property but does not commence

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reconstruction, the tenants are left without any remedy and therefore

the Court should carefully and cautiously examine the bona fides of

the landlord and should not order eviction unless fully satisfied of the

need for reconstruction and its bona fides. It was lastly submitted that

the condition of the building was one of the relevant and weighty -

factors and in as much as the building was neither dilapidated nor was

so old as to need immediately a demolition, the eviction could not

have been ordered. The landlord wanted to earn more and if such

expected earnings are secured by retaining the premises in the present

condition, in view of the offer made by the tenants, the question of

reconstruction being allowed does not arise at all.

In Prabhakaran Nair & Ors. Vs. State of Tamil Nadu & Ors.,

(1987) 4 SCC 238, constitutional validity of Section 14(1)(b) read

with Section 14(2)(b) was challenged on the ground that the provision

is violative of Article 14 of the Constitution because it does not

provide for re-entry of the tenant in the reconstructed premises as has

been done in several other State Legislations. It was also submitted

that while the premises, having been vacated for the purpose of repairs

under Section 14(2)(a), are available for re-occupation by the

dislodged tenants, a similar provision is not to be found for protecting

the tenants evicted for the purpose of reconstruction under Section

14(2)(b) and this also renders the latter provision unreasonable. The

challenge was turned down by this Court. This Court held inter alia

that in the case of demolition and reconstruction, the landlord has to

substantially commence the work of demolition in material portion of

the building not later than one month and the entire demolition work

to be completed before the expiry of three months from the date he

recovers possession of the entire building. This is a reasonable

guarantee for the bona fides of the landlord. Vide paras 12 and 13, the

Court held as under:-

"12. It has further to be borne in mind that

after such demolition the reconstruction of a new

building on the same site is bound to take time and

such time depends upon the nature of the building

to be erected and it might take years it was argued.

During that period a tenant was bound to have

found some other suitable alternative

accommodation; on the other hand in the case of a

building for repairs, a tenant may arrange for

temporary accommodation for a few months and

return back to the building. Therefore provision

for re-induction in the case of repairs and absence

of such a provision in the case of demolition and

reconstruction is quite understandable and rational.

13. It has to be borne in mind that it is not

practicable and would be anomalous to expect a

landlord to take back a tenant after a long lapse of

time during which time the tenant must necessarily

have found some suitable accommodation

elsewhere. This is the true purpose behind Section

14(1)(b) read with Section 14(2)(b). In the

aforesaid view of the matter, we are unable to

accept the submission that in providing for re-

induction of the tenant in case of repairs and not

providing for such re-induction in case of

reconstruction, there is any unreasonable and

irrational classification without any basis."

During the course of its judgment the Court further observed

that the courts are not concerned with the wisdom of the Legislature

and the provision contains sufficient inbuilt guidelines to save it from

being rendered unconstitutional. While protecting the tenants from

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unreasonable eviction, the landlords should not be discouraged from

constructing new buildings because in the ultimate result it would

augment the housing wealth of the nation which in turn would benefit

the tenants and protect their larger interest by reducing the shortage of

housing.

A three-Judge Bench in the case of P. Orr & Sons (P) Ltd. Vs.

Associated Publishers (Madras) Limited, (1991) 1 SCC 301,

considered Section 14(1)(b) of the Act and the underlying legislative

scheme and held that in order to make out a case for eviction under

Section 14(1)(b), demolition for the purpose of erection of a new

building must be the direct, immediate, genuine and real requirement

of the landlord. In the opinion of the Court, the bona fide character of

the requirement is proved by the appropriateness of time and the

absence of any ulterior or irrelevant consideration separating the

requirement from the statutory or permitted purpose. The direct and

immediate nexus between these two elements is proved by the

condition of the building and other relevant circumstances. What is

the degree of urgency warranted by what extent of damage to the

building that makes the requirement directly and immediately

connected with the statutory purpose, is a question of fact which must

be decided in each case on evidence. Absence of any need for

urgency by reason of the strong and sound condition of the building

will negative the bona fide character of the requirement and as such a

building which is sound and safe does not qualify for demolition in

terms of Section 14(1)(b). Any such building falls totally outside its

ambit.

Thus, in the opinion of three-Judges Bench in the above-noted

case, the determinative factor was the condition of the building though

in addition, other factors could be taken into consideration.

The three-Judges Bench decision in P. Orr & Sons came up for

the consideration of five-Judges Bench in Vijay Singh & Ors. Vs.

Vijayalakshmi Ammal, (1996) 6 SCC 475. The Constitution Bench

lamented the Legislature having not employed clear and specific

expression to make their intention clearly understandable. However,

keeping in view the two pronged purpose of the Act __ to protect the

tenants from eviction at the mere will and desire of the landlord and at

the same time to fulfil the legislative intent of securing eviction for the

"immediate purpose for demolishing", the Constitution Bench held

that the said expression could not be linked only with the dilapidated

and dangerous condition of the building. Section 16 was a pointer to

the legislative intent; if only such buildings which were dilapidated

and dangerous for human habitation were intended to be covered then

provision would not have been made in sub-section (1) of Section 16

for re-induction of the tenant in such a building on original terms and

conditions if the building was not demolished. On the contrary, there

being no provision for re-induction of the tenant in the newly

constructed building and, further, such newly constructed building

having been exempted from the provision of the Act for a period of

five years from the date of completion of such new building having

been notified to the local authority concerned, it is a clear indication

that the framers of the Act desired to encourage erection of new

building in place of the building which had been totally demolished

on the basis of the order passed by the Controller under Section

14(1)(b). The Constitution Bench summed up the view of the law in

the following words:-

"For granting permission under Section

14(1)(b) the Rent Controller is expected to

consider all relevant materials for recording a

finding whether the requirement of the landlord for

demolition of the building and erection of a new

building on the same site is bona fide or not. For

recording a finding that requirement for demolition

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was bona fide, the Rent Controller has to take into

account: (1) bona fide intention of the landlord far

from the sole object only to get rid of the tenants;

(2) the age and condition of the building; (3) the

financial position of the landlord to demolish and

erect a new building according to the statutory

requirements of the Act. These are some of the

illustrative factors which have to be taken into

consideration before an order is passed under

Section 14(1)(b). No court can fix any limit in

respect of the age and condition of the building.

That factor has to be taken into consideration along

with other factors and then a conclusion one way

or the other has to be arrived at by the Rent

Controller."

We may refer to two decisions of Madras High Court. In S.

Raju and others Vs. K. Nathamani, 1998 (3) LW 214, the

Constitution Bench decision has been followed and it has been held

that when new buildings with modern amenities have come up in that

locality, naturally the building in question may become unsuitable to

the surroundings and a liability, in its present condition, to the

landlord. Keeping the building in the same condition will amount to

asking the landlord to shoulder the burden for ever. Tenants may be

satisfied with the present state of the building since they have to pay

only a nominal rent but the Rent Control Legislation, beneficial to the

landlord and the tenant both, should be interpreted in that way. For

the purpose of proving his bona fides the landlord need only show that

he has got the capacity to raise the necessary funds. In A.N.

Srinivasa Thevar Vs. Sundarambal alias Prema W/o.

Chandrakumar, 1995 (2) LW 14, even before the decision by

Constitution Bench in Vijay Singh's case was available, it was held in

the light of the decision in P. Orr & Sons that the availability of the

following factors was sufficient to make out a case of bona fide

requirement under Section 14(1)(b): "(a) Capacity of the landlord to

demolish and to reconstruct is undisputed and also proved

satisfactorily; (b) The size of the existing building occupies only one

third of the site, leaving two third behind vacant and unutilized; (c)

Demand for additional space: The demised premises is situated in a

busy locality. Therefore, there is a great demand for additional space

in the locality which could be met by demolishing the existing small

building and putting up a larger building providing for future

development vertically also, by building pucca terraced building; (d)

The economic advantage: A modern construction of a larger building

shall certainly yield better revenue and also appreciate in value, when

compared to the asbestos sheet roofed old building." In that case, it

was observed that the existing building was an old, out-model

asbestos sheet building proposed to be replaced with better and

modern building which would provide for better quality

accommodation to the needs of the present days as the preservation of

such building in a busy locality of a town shall not only be an eyesore

but also against the souring public demand for additional space.

Viewed from the angle of general interest of the public which,

according to the decision in P. Orr & Sons is one of the

considerations, it was observed that a big site should yield to a larger

modern building with an increased and enlarged accommodation

having better facilities to solve the ever increasing demand for more

space. Stalling growth and development for the sake of one tenant

who is in occupation of an old model building constructed with mud

and mortar and asbestos sheets occupying only one third of the site

was held to be not conducive to public interest. We approve the

statement of law and the approach adopted by Madras High Court in

both the abovesaid decisions. The structural and physical features and

the nature of the construction of the building cannot be ignored. Even

in P. Orr & Sons, this Court was of opinion that various

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circumstances, such as the capacity of the landlord, size of the

existing building, the demand for additional space, the condition of

the place, the economic advantage and other factors, justifying

investment of capital on reconstruction may be taken into account by

the concerned authorities, while considering the requirement for

reconstruction of the building as the essential and overriding

consideration in the general interest of the public and for the

protection of the tenant from unreasonable eviction.

Reverting back to the case at hand, we find that the six tenants

are not in full occupation of the entire space available. The landlord

proposes to construct a new and modern building in busy commercial

locality of a rising city. The landlord requires a part of the newly

constructed building for his own personal use and such part of the

newly constructed building as would be in excess of his own

requirement he is willing to let out at current rate of rent to his tenants

which would obviously augment his earnings. The newly constructed

double storeyed building, would certainly provide much more total

accommodation than what is available. In such circumstances the

offer of the tenant that they are prepared to pay the rent at the current

rate, the one which the landlord expects on reconstruction, becomes

irrelevant and should not have prevailed with the High Court.

For the foregoing reasons, we are of the opinion that the High

Court ought not to have interfered with the decision of the appellate

authority. The appeals are allowed. Judgment of the High Court is

set aside and that of the appellate authority restored. However, in

view of the time that has already been lost in the litigation and to

protect the interest of the tenants and certainly to allay their fears, it is

directed that the executing Court shall, before directing the tenants

to be evicted and possession being given to the landlord, direct the

landlord to file plans of proposed construction, duly approved by the

local authority, and give an undertaking in terms of Section 14(2)(b)

of the Act. No order as to costs.

........J

(R.C. LAHOTI)

..J.

(P.VENKATARAMA REDDI)

April 9, 2002.