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Se.106, 108 B (e) and sec.114 of T.P.Act – Destroy of leased property – No Doctrine of frustration of contract – Permanent lease renewable from time to time – Purchaser of leased property – when tried to demolish the leased building – Tenant filed suit for injunction – pending suit , he demolished the building step by step – suit amended for Mandatory injunction – all lower courts dismissed the suit – Apex court held that what the purchaser purchased is only title in ownership but not lease hold rights and as such with out restoring to sec.106 of T.P. Act , he can not evict the tenant nor do any acts against the rights and liabilities of lease agreement – as the purchaser demolished the building pending suit , he is not entitled for the benefit of sec.108 B (e) and much more bared from claiming any benefits under it’s proviso and as there is no possiblity to restore the possession directed to pay compensation of Rs.20 lakhs and further held that the law laid in T. Lakshmipathi (supra) are correct and the law laid down in Vannattankandy Ibrayi not correct and as such over ruled the same and further held that since the building was destroyed – civil court has got jurisdiction = CIVIL APPEAL NO. 127 OF 2007 M/S SHAHA RATANSI KHIMJI & SONS … APPELLANTS VERSUS PROPOSED KUMBHAR SONS HOTEL P. LTD. & ORS. … RESPONDENTS = 2014 – July. Part – http://judis.nic.in/supremecourt/filename=41760

Se.106, 108 B (e) and sec.114 of T.P.Act – Destroy of leased property – No Doctrine of frustration of contract – long standing lease renewed from time to time and in continuation – Purchaser of leased property – when tried to demolish the leased building – Tenant filed suit for injunction – pending suit , he demolished the building step by step – suit amended for Mandatory injunction – all lower courts dismissed the suit – Apex court held that what the purchaser purchased is only title in ownership but not lease hold rights and as such with out restoring to sec.106 of T.P. Act , he can not evict the tenant nor do any acts against the rights and liabilities of lease agreement – as the purchaser demolished the building pending suit , he is not entitled for the benefit of sec.108 B (e) and much more bared from claiming any benefits under it’s proviso and as there is no possiblity to restore the possession directed to pay compensation of Rs.20 lakhs and further held that the law laid in T. Lakshmipathi (supra) are correct and the law laid down in  Vannattankandy Ibrayi  not correct and as such over ruled the same  and further held that since the building was destroyed – civil court has got jurisdiction =

When the matter came before this Court, vide order dated 5th  January,

2007, this Court referred the matter to a Bench of three  Judges.  The  said

order reads as under:

“Apparently there seems to be inconsistency in the view taken by this  Court

in Vannattankandy Ibrayi Vs.  Kunhabdulla  Hajee  [(2001)  1  SCC  564]  and

T.Lakshmipathi & Ors. Vs.  R.Nithyananda Reddy & Ors. [(2003) 5 SCC 150].

In the case of Vannattankandy Ibrayi Vs. Kunhabdulla Hajee,  (2001)  1

SCC 564,

this Court formulated two questions for consideration:

“(a) Whether the tenancy in respect of the premises governed by the  Kerala

Buildings  (Lease  and  Rent  Control)  Act  (hereinafter  referred  to   as

[pic]“the State Rent Act”) is extinguished by destruction  of  the  subject-

matter of tenancy i.e. the premises by natural calamities, and

(b) On the destruction of property whether the civil court has  jurisdiction

to entertain and try the suit for recovery of possession of land brought  by

the landlord.”

Both questions were answered in the affirmative.

In Lakshmipathi & Ors. Vs.  R.Nithyananda Reddy & Ors.  (2003)  5  SCC

150,

this Court held that lease of a building includes, the  land  on  which

the building stands. So even if the building  is  destroyed  or  demolished,

the lease is not determined as long as the  land  beneath  it  continues  to

exist.   Doctrine  of  frustration  cannot  be  invoked  on  destruction  or

demolition of a building under lease where not only privity of contract  but

privity of estate is also created.=

Apex court held that

It has been further opined that once a tenancy is created  in  respect

of a building standing on the land it is the building  and  the  land  which

are both components of the subject-matter of demise and the  destruction  of

the building alone does not determine the tenancy when  the  land  which  is

the site of the building continues to exist.   This  interpretation,  as  we

find, is in accord with Section 108 of the Act. It is  reflectible  that  in

Vannattankandy Ibrayi’s case, the two-Judge Bench observed that  the  rights

stand extinguished as on  the  distinction  of  the  demise,  for  there  is

destruction of the superstructure and  in  its  non-existence  there  is  no

subject matter. Thus, the land has been kept out of the concept  of  subject

matter.  In our considered opinion, the Court in the  said  case  failed  to

appreciate that there are two categories of subject-matters, combined  in  a

singular capsule, which is the essence of provision under  the  Transfer  of

Property  Act  and  not  restricted  to  a  singular  one,  that   is,   the

superstructure.  In T. Lakshmipathi (supra) the Court took note of the  fact

that the land and superstructure standing on it as a singular component  for

the purpose of tenancy.   It  is  in  tune  with  the  statutory  provision.

Therefore, we agree with the proposition stated therein to the  affect  that

“in the event of the tenancy having been created in respect  of  a  building

standing on the land, it is  the  building  and  the  land  which  are  both

components of the subject-matter  of  demise  and  the  destruction  of  the

building alone does not determine the tenancy when the land  which  was  the

site of the building  continues  to  exist”.   On  the  touchstone  of  this

analysis,  we   respectfully   opine   that   the   decision   rendered   in

Vannattankandy Ibrayi (supra) does not correctly lay down  the  law  and  it

is, accordingly, overruled.

in this case – the purchaser of the property destroyed the rented go down pending suit by stating that it was destroyed due to natural climates and resisted the suit for injunction filed by lessor – trial court , appellant court and High court dismissed the suit – Now this case before Apex court=

 In or about 1961-62, the appellant firm took the godown over the  suit

property on rent from Ujjwal Lahoti;  Since  then  the  appellant  has  been

continuously paying rent to Ujjwal Lahoti  and  storing  its  goods  in  the

godown. The appellant was using the  access  on  the  eastern  side  of  the

godown for approaching the municipal road and in bringing its goods  to  the

godown.=

the plea of appellant is that 

even  after

the destruction of the tenanted premises, the  tenancy  is  not  determined,

and hence the appellant is entitled to the benefit of Section  108(B)(e)  of

the Transfer of Property Act, 1882  (hereinafter  referred  to  as  ‘the  TP

Act’). It was contended that even if the  tenanted  premises  is  completely

destroyed and  renders  the tenanted premises substantially  or  permanently

unfit for the purpose for which it was let out, the lease subsists till  the

tenant terminates the lease.

Section 108 of the T.P. Act  explains  the  rights  &  liabilities  of

lessor and lessee and  provisions  of  the  said  section  relevant  to  the

present case i.e. Section 108(B)(e) reads as under:

“108. Rights and liabilities of lessor or lessee. –  In  the  absence  of  a

contract or local usage to the contrary,   the  lessor  and  the  lessee  of

immovable property,  as  against  one  another,  respectively,  possess  the

rights and are subject to the   liabilities  mentioned  in  the  rules  next

following, or such of them as are applicable to the      property leased:-

Rights and Liabilities of the Lessor

x x x x x

Rights and liabilities of the Lessee

(e) If by fire, tempest or flood, or violence of any army or  of  a  mob,

or other irresistible force, any material part of  the  property  be  wholly

destroyed or rendered substantially and permanently unfit for  the  purposes

for which it was let, the lease shall, at  the  option  or  the  lessee,  be

void:

Provided that, if the injury be occasioned by the wrongful  act  or  default

of the lessee, he shall not be entitled to avail himself of the  benefit  of

this provision;”

Case facts

In the present  case,  it  is  not  in  dispute  that  the  respondent

purchased the lessor’s interest. The lease  continued  even  thereafter  and

did not extinguish.  The lease was subsisting when the shares  of  the  land

were purchased by the respondent. But the interest of  the  lessee  was  not

purchased by the respondent.  What has been purchased by the  respondent  is

the right and interest of ownership of the property.  The  interest  of  the

appellant as lessee has not been vested with the respondent.  Therefore,  we

are of the view that the tenancy of the appellant cannot  be  said  to  have

been determined consequent upon demolition and destruction of  the  tenanted

premises.

Apex court held that 

34.   In view of the fact and circumstances of the case, we  have  no  other

option but to set aside the impugned judgment and decree  dated  18th  July,

2006 passed by the High Court of Judicature at Bombay in Second  Appeal  No.

109 of 2006 and Judgment and decree dated 30th November, 2005 passed by  the

Addl. District Judge, Karad in RCA No. 86  of  2002.  However,  taking  into

consideration the fact that the appellant is not in possession of  the  suit

property  since  long,  we  are  not  inclined  to  direct  restoration   of

possession of  suit  property  to  the  appellant.  Instead  we  direct  the

respondent to pay a sum of Rs. 20,00,000/- (Rupees  Twenty  Lakhs  only)  in

favour of the appellant towards compensation  for  depriving  the  appellant

from enjoying the suit property, within two months, failing which  it  shall

be liable to pay interest @ 6% per annum from the date of the judgment.

35.   The appeal is allowed with the aforesaid  observation  and  direction.

No costs.

 Coming to the next question whether the civil  court  was  competent  to

entertain and  try  the  suit  filed  by  the  respondent  for  recovery  of

possession of the vacant land. 

As already stated above, the tenancy  in  the

present case was of a shop room which was let out to  the  tenant.  What  is

protected by the State Rent Act is the  occupation  of  the  tenant  in  the

superstructure.  The  subject-matter  of  tenancy  having  been   completely

destroyed the tenant can no longer use the said shop  and  in  fact  he  has

ceased to occupy the said shop. Section 11 of the State Rent  Act  does  not

provide for eviction of the tenant on  the  ground  of  destruction  of  the

building or the superstructure. Thus when  there  is  no  superstructure  in

existence the landlord cannot claim recovery of possession  of  vacant  site

under the State Rent Act. The only remedy available to  him  is  to  file  a

suit in a civil court for recovery of possession of land.  In  view  of  the

matter the civil court was competent to entertain and try the suit filed  by

the respondent landlord.”

2014 – July. Part – http://judis.nic.in/supremecourt/filename=41760

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