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.”
advocatemmmohan 
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