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CASE NO.:

Appeal (civil) 4392 of 1983

PETITIONER:

Spun Casting & Engg. Co.Pvt.Ltd.

RESPONDENT:

Dwijendra Lal Sinha (Dead) through Lrs. & Ors

DATE OF JUDGMENT: 08/04/2005

BENCH:

ASHOK BHAN & A.K.Mathur

JUDGMENT:

J U D G M E N T

BHAN, J.

This appeal by grant of special leave

has been filed by defendant no.1, the

appellant herein, against the judgment and

decree passed by the High Court of

Calcutta. By the impugned judgment the

High Court has restored the decree for

recovery of possession and mesne profits

with regard to Plaint 'B' Schedule property

in favour of the plaintiffs/original

respondent nos.1 & 2 (since deceased and

now represented by their legal

representatives), setting aside the

judgment of the Appellate Court in Title

Appeal No.52/1976 and restoring that of the

Trial Court.

Facts necessary for the disposal of

this appeal are as under:

One Hangeswar alias Narendra Nath

Singha on 4th February, 1936 obtained

settlement/lease-hold interest for 'A'

Schedule property, i.e. premises no 77,

Benaras Road, Howrah admeasuring 3 Bighas

including a tank from Sear Sole Raj Estate.

He raised certain constructions including

sheds on 'B' Schedule property, a part of

'A' Schedule property and set up an iron

casting foundry under the name and style of

D.L. Singha and Company, which was run by

him till his death. After his death on 31st

May, 1954, his legal heirs, original

respondent nos. 1 and 2 settled the whole

karbar (business) of iron casting foundry

along with land and all fittings and

fixtures in favour of one Kalipada Mondal

and Bahar Bala Dassi on 27th July, 1954, for

a period of five years starting with the

month of Baisakha 1361 B.S. Bangabda Samvat

(for short "B.S.") (Bangla year) to Chaitra

1365 B.S. at a monthly rent of Rs. 466/3

annas. By successive transfers, interest of

original lessees/settlees came to be

acquired by the appellant on 18th January,

1956 (A.D.). Settlement in favour of the

appellant came to an end by efflux of time

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in Chaitra 1365 B.S., equivalent to, 13th

April, 1959. Appellant failed to vacate

the 'B' Schedule property as well as to pay

the rent after 1363 B.S.

Original plaintiff nos. 1 and 2

instituted suit no. 11/1959 against the

appellant but the same was withdrawn due to

some formal defects with liberty to file a

fresh suit. After the withdrawal of said

suit, appellant trespassed over 'C'

Schedule property, i.e. remaining 'A'

Schedule property consisting of a tank and

its three banks. Appellant filled up the

tank, raised certain structures thereon and

extended its work over the said property.

Plaintiff respondent nos. 1 and 2,

feeling aggrieved by the conduct of the

appellant, instituted the present suit no.

65/1965 for recovery of possession of 'B'

and 'C' Schedule properties and for mesne

profits. Appellant in the written

statement, interalia denied the title of

the plaintiffs to the suit property as well

as existence of relationship of landlord

and tenant between them. The allegation

that the appellant had trespassed over 'C'

Schedule property was denied.

Subordinate Court decreed the suit with

respect to both 'B' and 'C' Schedule

properties. It was held that 'C' Schedule

property was not let out to the appellant

and the appellant had taken possession of

the same by committing trespass. That

relationship of landlord and tenant existed

between the parties with regard to 'B'

Schedule property. It was held that the

predecessors-in-interest of the appellant

became tenant of the premises by virtue of

settlement of karkhana (factory) together

with the land underneath in their favour.

Appellant having stepped into their shoes

is estopped under Section 116 of the Indian

Evidence Act from disputing the title of

the plaintiffs. The settlement came to an

end by efflux of time on 13th April, 1959.

There was no necessity to determine the

tenancy by issuing a notice under Section

106 of the Transfer of Property Act.

Service of notice under Section 13 (6) of

the West Bengal Premises Tenancy Act, 1956

(for short "the Act") was sufficient to put

an end to the relationship of landlord and

tenant between the parties. It was also

held that the appellant had committed

default in payment of rent of 'B' Schedule

property.

Appellant being aggrieved preferred

Title Appeal no. 52/1976 challenging the

judgment and decree passed by the

Subordinate Court in favour of the

plaintiff-respondents. Appellate Court

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partly allowed the appeal, affirming the

decision of the Subordinate Court that 'C'

Schedule property was not covered by the

settlement dated 27th July, 1954 and was

trespassed upon by the appellant.

Appellant had raised construction on 'C'

Schedule property illegally without taking

permission from the landlord. With respect

to 'B' Schedule property the judgment and

decree passed by the Trial Court was set

aside. It was held that since the Trial

Court had found tenancy to be a premises

tenancy, it must be governed by the

provisions of the West Bengal Premises

Tenancy Act, 1956 and, therefore, neither

expiry of the period of settlement nor the

assignment of the interest created

thereunder in favour of the appellant can

be a ground for eviction of the appellant.

That tenancy of 'B' Schedule property could

not be determined without issuing notice

under Section 106 of the Transfer of

Property Act. That the settlement dated

27th July, 1954 was made by the respondents

in their character as a partnership firm

and therefore suit for eviction filed by

them in their individual capacity was not

maintainable.

Feeling aggrieved by the findings of

the Appellate Court with respect to the

trespasser over 'C' Schedule property,

appellant preferred Second Appeal no.

646/1977 and being aggrieved by the setting

aside of the decree with respect to 'B'

Schedule property, plaintiff-respondents

filed cross objections in the High Court.

High Court heard the second appeal and

cross objections together and disposed them

of by passing a common judgment.

Appeal filed by the appellant with

regard to 'C' Schedule property was

dismissed. It was held that the evidence on

record established as found concurrently by

the courts below that the occupation of the

appellant on the said property was illegal

and by way of trespass. Cross objections

filed by the plaintiff-respondents were

allowed granting decree for recovery of

possession of 'B' Schedule property.

Contention raised by the counsel for the

respondents that the settlement dated 27th

July, 1954 entered into between Narendra

Nath Singha and predecessors-in-interest of

the appellant was not the tenancy of

"premises" as had been held by the courts

below but was the tenancy of the karbar

(business) of iron casting foundry along

with the machineries and sheds and

structures wherein the foundry was set up

was accepted. High Court after construing

the provisions of the settlement dated 27th

July, 1954 and relying upon the three

decisions of this court in Uttamchand vs.

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S.M. Lalwani (AIR 1965 SC 716), Dwarka

Prasad vs. Dwarka Das Saraf (AIR 1975 SC

1758) and Natraj Studios (P) Ltd. vs.

Navrang Studios (AIR 1981 SC 537) observed

that the dominant intention of the parties

while creating the lease was to lease the

karbar (business) of iron casting foundry

and not that of the premises within the

meaning of Section 2 (f) of the West Bengal

Premises Tenancy Act, 1956. Structures and

sheds formed part of the settlement only

because the foundry was set up therein.

That the parties never intended to settle

or grant lease of the structures and sheds

as such and therefore, it could hardly be

said to be a settlement in respect of the

premises constituting a tenancy of the

premises within the meaning of West Bengal

Premises Tenancy Act, 1956. Finding of the

First Appellate Court with regard to the

requirement of issuance of notice under

Section 106 of the Transfer of Property Act

was set aside. It was further held that

after the dissolution of the partnership

firm the respondents could file the suit in

their individual capacity.

Finding recorded by the courts below

and affirmed by the High Court that the 'C'

Schedule property had not been let out to

the appellant and that the appellant had

trespassed upon the same is a finding of

fact based on evidence and, therefore, does

not call for interference.

Finding recorded by the High Court with

regard to the requirement of issuance of

notice under Section 106 of the Transfer of

Property Act and the maintainability of the

suit by the respondents in their individual

capacity after the dissolution of the

partnership firm has not been challenged

before us. These two findings are also

affirmed.

With regard to 'B' Schedule property

the High Court set aside the finding of the

First Appellate Court on two counts.

Firstly, that the appellant had committed a

default in payment of the rent after 1363

B.S. and secondly, on the ground that what

was let out to the appellant was not the

premises within the meaning of Section 2

(f) of the Act but the business housed in a

building along with machinery which was not

covered under the provision of the Act.

Learned counsel for the appellant is

right in submitting that the High Court has

erred in holding that the appellant had

committed a default in payment of the rent.

Plaintiff-respondents in their plaint did

not take the plea that the appellant had

committed a default in the payment of the

rent or seek his eviction on the ground of

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failure to pay the rent. No issue had been

framed on this point. There is no material

on the record to show that the appellant

did not deposit the alleged arrears of rent

as required by Section 17 (i) of the West

Bengal Premises Tenancy Act, 1956, and as

such a decree on the ground of default in

payment of rent could not be passed. In

the absence of any pleadings and evidence

on record that the appellant had committed

a default in the payment of rent, the High

Court has erred in passing a decree for

eviction on that ground.

This Court in Uttam Chand v. S.M.

Lalwani, AIR 1965 SC 716 drawing a

distinction between the lease of a building

and the lease of a business held that what

was protected under the Act was the lease

of the building and not the lease of the

business. The question before the Court was

as to whether the lease created of Dal Mill

building with fixed machinery in sound

working condition was an 'accommodation'

within the meaning of Section 3A of the

Madhya Pradesh Accommodation Control Act,

1955. For determining the nature of lease

created the Court laid the test of

'dominant intention' of the parties while

creating the lease which is to be gathered

in each case by construing the terms of the

lease deed. Construing the terms of the

lease in the said case this Court came to

the conclusion that the dominant intention

of the parties was to create the lease of

the business and not that of the building.

It was held that since the lease created

was of running the business, the same was

not protected under the Act. It was

observed in para 12 as under:-

"12. What then was the dominant

intention of the parties when

they entered into the present

transaction? We have already

set out the material terms of

the lease and it seems to us

plain that the dominant

intention of the appellant in

accepting the lease from the

respondent was to use the

building as a Dal Mill. It is

true that the document purports

to be a lease in respect of the

Dal Mill building; but the said

description is not decisive of

the matter because even if the

intention of the parties was to

let out the Mill to the

appellant, the building would

still have to be described as

the Dal Mill building. It is

not a case where the subject

matter of the lease is the

building and along with the

leased building incidentally

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passes the fixtures of the

machinery in regard to the Mill;

in truth, it is the Mill which

is the subject matter of the

lease, and it was because the

Mill was intended to be let out

that the building had inevitably

to be let out along with the

Mill. "

It was further observed in the same

paragraph:-

"The fixtures described in the

schedule to the lease are in no

sense intended for the more

beneficial enjoyment of the

building. The fixtures are the

primary object which the lease

was intended to cover and the

building in which the fixtures

are located comes in

incidentally. That is why we

think the High Court was right

in coming to the conclusion that

the rent which the appellant had

agreed to pay to the respondent

under the document in question

cannot be said to be rent

payable for any accommodation to

which the Act applies."

Following the aforesaid judgment in

Dwarka Prasad vs. Dwarka Das Saraf, AIR

1975 SC 1758 this Court held that where a

cinema theatre equipped with projector and

other fittings is let out it would not be a

lease of 'accommodation' as defined in

Section 2 (1) (d) of the U.P. (Temporary)

Control of Rent and Eviction Act, 1947. It

was observed that, legislature intended to

cover within the meaning of word

'accommodation,' premises simpliciter

either for residential, commercial or

industrial purposes but did not include the

business accommodated in a building. Where

the business itself was let out, the same

would not fall within the meaning of the

word 'accommodation' enjoying the

protection of the Rent Act. That the

leasing of a lucrative cinema business

could not be reduced to a mere tenancy of

building covered within the scope of the

definition of 'accommodation'.

In the present case according to the

plaintiff-respondents what was settled was

the business of iron casting foundry along

with building and the machinery therein and

not the premises within the meaning of West

Bengal Premises Tenancy Act, 1956. In

order to determine the true character of

the settlement, it would be necessary to

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refer to the deed itself and construe the

terms thereof.

The deed has not been described as a

lease but as "an agreement for five years."

In the first paragraph of the deed, the

settlers recite how the first party having

taken settlement of the land at premises

no.77, Benaras Road along with a tank had

set up an iron casting foundry valued

approximately at Rs.75,000/-. It then goes

on to recite that it is the said karkhana

or in other words the business which is

being settled with the second party i.e.

the appellants on terms and conditions set

out therein. Clause (i) of the terms

provides that the second party is taking

settlement of the business along with all

its fixtures and appliances and the

interest of the settlers in the land on an

annual rent of Rs.5,594.4 annas payable on

a monthly instalment of Rs.466.3 annas.

The relevant portion of Clause (i) reads:

"The Second party is taking the

said karbar (business) together

with all rights on the aforesaid

land and all fittings and

fixtures of the Iron Foundry

styled D.L. Singha & Co. from

the first party with the promise

to pay a sum of Rs.5594-4 as

five thousand five hundred

ninety four and four annas per

annum on account of rent."

Under Clause (ii) the settlers

undertake to pay the rent to the landlord

as also to the municipality. Clause (iii)

provides for forfeiture of the settlement

for non-payment of rent for four

consecutive months. Clause (iv) provides

that on the expiry of the agreement the

"fittings and fixtures of the said karbar

(business) which the second party is now

receiving from the first party (the second

party) shall return the same on the expiry

of the period of agreement. If there be

any loss or damage to the same the same

shall be made good by the second party."

Clause (v) provides that if necessary,

second party can bring in new fixtures and

appliances with prior notice to the

settlers and on the expiry of the agreement

the second party shall be entitled to

remove the fixtures and appliances brought

by them. Clause (vi) provides that

settlers will be entitled to carry on the

business in their own firm's name but they

shall have to bear all the expenses for

electricity and telephone. Clause (vii)

provides that after the expiry of first

term if the second party desires to carry

on the said karkhana (business) the first

party shall enter into a separate agreement

for a stipulated period. Clause (ix)

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expressly excludes the tank and its three

banks from the settlement so made.

The High Court after referring to the

above quoted terms of the settlement came

to the conclusion that the dominant

intention of the parties who entered into

the settlement was to effect a settlement

in respect of the business of iron casting

factory. The structures and sheds formed a

part of the settlement only because the

foundry was set up therein. The parties

had never intended to settle or grant lease

of the structure and the sheds as such.

The High Court concluded that what was let

out to the appellant was the business of

running a iron casting foundry along with

the building and the machinery and not a

premises constituting a 'premises tenancy'

within the meaning of Section 2 (f) of the

West Bengal Premises Tenancy Act, 1956.

We have no hesitation in accepting the

findings recorded by the High Court.

Premises have been defined under Section

2(f) of the Act to mean:-

"Section 2 (f) : "premises"

means any building or part of a

building or any hut or part of a

hut let separately and includes-

(i) the gardens, grounds, and

out-houses, if any,

appertaining thereto,

(ii) any furniture supplied or

any fittings or fixtures

affixes for the use of the

tenant in such building or

part of a building or hut

or part of a hut; but does

not include a room in

hotel or a lodging house."

Reading the terms of the settlement as

aforesaid and construing the same we are of

the view that the dominant intention of

the settlers was to effect the

settlement in respect of the karbar

(business) of iron casting foundry set up

by them along with machinery housed in a

building. 'Premises' in the Act are

defined to mean a building or a part of a

building which includes gardens, grounds

and out-houses, if any, appertaining to the

building. It also include the furniture

supplied or any fittings or fixtures in a

building or a part of the building but

would not include a room in a hotel or a

lodging house. It does not include the

lease of a business along with machinery in

a building. The intention of the parties

was not to settle or grant lease of the

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structures and sheds as such. Structures

and sheds did not constitute the dominant

part of the settlement in favour of the

appellant. It is evident from the terms of

the settlement that the dominant intention

of the parties was to create a lease for

running the business of an iron casting

foundry. It cannot be said that the

settlement was in respect of the premises

constituting 'premises tenancy' within the

meaning of the Act. Tenancy was not being

created of the premises to run a business

it was to the contrary.

In Natraj Studios (P) Ltd. v. Navrang

Studios and another, AIR 1981 SC 537 though

this Court took the same view but keeping

in view the peculiar provisions of the

Bombay Rents, Hotel and Lodging House Rates

Control Act, 1947, it was held the

principle laid down in the earlier two

judgements would not be applicable to the

case. Referring to the amended provisions

of the said Act it was held that the

tenancy created was of the premises within

the meaning of Section 5 (8) and 5 (8A) to

which Part 11 of the Act has been made

applicable by Section 6 (1) notwithstanding

the fact that the building was not let out

as such. We do not agree with the learned

counsel for the appellant that this Court

in Natraj Studios (P) Ltd. (supra) had

revised its earlier view. The provisions

of West Bengal Premises Tenancy Act, 1956

are altogether different from the

provisions of the Bombay Rents, Hotel and

Lodging House Rates Control Act, 1947. The

West Bengal Premises Tenancy Act, 1956 can

have application only if what is settled by

way of lease is a premises and in order to

decide whether the settlement is such or

not, we are governed by the well settled

principle laid down by three-Judge Bench of

this Court in Uttamchand vs. S.M. Lalwani,

AIR 1965 SC 716 followed by a later Bench

of four hon'ble Judges in Dwarka Prasad vs.

Dwarka Das Saraf, AIR 1975 SC 1758. In our

view, what was settled in the present case

was not the premises for carrying on a

particular business but the businesses

itself and therefore, it cannot come within

the purview of West Bengal Premises Tenancy

Act, 1956

No other view was urged before us. For

the reasons stated above we do not find any

infirmity in the judgment and decree passed

by the High Court and the same is affirmed.

Accordingly, the appeal is dismissed with

no orders as to costs.