Supreme Court of India
DUNLOP INDIA LIMITEDversusA.P. RAHNA AND ANR.
- Citation
- 2011 INSC 353
- Decided
- 4 May 2011
- Disposal
- Dismissed
- Bench
- G S SINGHVI
Holding
The landlord must prove cessation of actual occupation; once established, the tenant must show a reasonable cause, and financial distress of a sick company does not qualify, making the eviction petitions maintainable and not barred by res judicata, while s.22(1) of the 1985 Act does not impede eviction.
Summary
The dispute concerned eviction of Dunlop India Limited from premises leased under the Kerala Buildings (Lease and Rent Control) Act, 1965. The landlord alleged that the tenant had ceased to occupy the premises for more than six months without reasonable cause, first from June 1998 and later from September 2001. The tenant argued that its financial distress, being a sick industrial company under the Sick Industrial Companies (Special Provisions) Act, 1985, constituted a reasonable cause and that the later petitions were barred by res judicata. The Supreme Court held that "occupy" means actual use of the premises, not mere legal possession, and that the landlord bears the initial burden to prove cessation of occupation; once proved, the tenant must demonstrate a reasonable cause, which financial difficulty alone does not satisfy. The Court also ruled that Section 22(1) of the 1985 Act does not bar eviction proceedings and that the two sets of petitions were not barred by res judicata. Consequently, the appeals were dismissed and the eviction orders upheld.
Issues considered
- The meaning of "occupy" under s.11(4)(v) of the Kerala Buildings (Lease and Rent Control) Act, 1965 and its distinction from legal possession.
- Whether the landlord has discharged the initial burden of proving that the tenant ceased to occupy the premises for six continuous months.
- Whether the tenant can rely on financial difficulty and its status as a sick industrial company as a reasonable cause for non‑occupation.
- The applicability of s.22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 to bar eviction proceedings.
- Whether the second set of eviction petitions are barred by res judicata on the ground of being substantially similar to the earlier petitions.
Legislation cited
- Kerala Buildings (Lease and Rent Control) Act, 1965s. 11(1), s. 11(2)(b), s. 11(3), s. 11(4)(i), s. 11(4)(v), s. 15, s. 22(1)
- Sick Industrial Companies (Special Provisions) Act, 1985s. 17(3), s. 22(1)
Subjects
evictionleaserent controloccupationreasonable causesick industrial companyres judicataburden of proofcommercial lease
Judgment
[2011] 5 S.C.R. 1080
A DUNLOP INDIA LIMITED
v.
AP. RAHNA AND ANR.
(Civil Appeal No. 3911 of 2011)
MAY 4, 2011
B
[G.S. SINGHVI AND ASOK KUMAR GANGULY, JJ.]
Kerela Buildings (Lease and Rent Control) Act, 1965:
c s.11(4)(v)- Eviction on the ground that tenant ceased to
occupy the premises for six months without reasonable cause ,
- Held: If the premises is let out for business or commercial
purpose, complete cessation of the business/commercial
activity may give rise to a presumption that the tenant had
D ceased to occupy the premises - The inittal burden to show
that the tenant has ceased to occupy the premises
continuously for 6 months is always on the landlord· - Once
such evidence is adduced, the burden shifts on the tenant to
prove that there was reasonable cause for his having ceased
E to occupy the tenanted premises for a continuous period of 6
months - In the instant case, the tenant did not produce any
evidence to prove physical occupation of the premises or any
business transaction - It also failed to produce any evidence
to show that there was reasonable cause for non occupation
of the suit premises - The tenant was declared a sick
F company - It had neither pleaded nor any evidence was
produced to show that the financial stringency was due to the
reasons beyond its control - Therefore, so called financial
stringency cannot be construed as reasonable cause within
the meaning of s.11(4)(v) - The finding of courts below that
G the landlord had succeeded in making out a case for eviction
u/s.11 (4)(v) and there was no reasonable cause for the tenant
to have ceased to occupy the suit premises continuously for
a period of six months is upheld - Rent and eviction.
H 1080
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1081
s.11(4)(v) - Financial difficulty of the tenant whether A
reasonable cause for non-occupation of the tenanted
premises - Held: If the suit premises is ·let out for industrial ·
or commercial/business purpose and the same is not used
for the said purpose continuously for a period of six months,
the tenant cannot plead financial crunch as a groc.md to justify B
non-occupation of the building unless cogent evidence is
produced by him to prove that he could not carry on the
industrial or commercial/business activity due to fiscal
reasons which were beyond his control - Legal possession
of the building by the tenant by itself, is not sufficient for c
refusing an order of eviction unless the tenant proves that
there was reasonable cause for his having ceased to occupy
the building - Sick Industrial Companies (Special Provisions)
Act, 1985 - s.22(1).
Applicability of s.22(1) ~f SICA, 19B5 to eviction D
proceedings - Held: Prohibition contained in s.22(1) does not
operate as a bar to the maintainability of a petition filed for
evictiOn of tenant - Sick Industrial Companies (Special
Provisions) Act, .1985 - s. 22(1 ). ·
E
Res judicata: Eviction petitions on the ground that tenant
ceased to occupy the premises continuously for six months
from June 1998 without any reasonable cause- Rent Control
Court decreed the suit - Appellate Court set aside the decree
- High Court affirmed the same - Meanwhl1e another set of F
eviction petitions filed on the ground that tenant ceased· to
occupy the premises from September 2001 continuously for
six months without any reasonable cause - Held: The second
set of rent control petitions were not barred by res judicata
because the period of non-occupation was different in the two G
petitions and even though the ground of eviction in the' two
sets of petitions was similar, the same were based on different
causes.
Words and phrases:
H
1082 SUPREME COURT REPORTS [2011] 5 S.C.R.
A Word "occupy" - Connotation of, in the context of
s.11(4){v) of the Kerela Buildings (Lease and Rent Control)
Act, 1965. .
Occupy and legal possession - Distinction between.
B The respondents-landlord filed the eviction petitions
against the appellant-tenant on the various grounds
under the Kerela Buildings (Lease and Rent Control) Act,
1965 including the ground prescribed under Section
11(4)(v) of the Act alleging that the appellant had ceased
C to occupy the suit premises from June, 1998. The Rent
Control Court held that the appellant had ceased to
occupy the suit premises continuously for six months
without reasonable cause and, therefore, allowed the
petitions and directed the appellant to vacate the
D premises. The Appellate Court set aside the eviction order
passed by the Rent Control Court. The High Court
dismissed the revision petitions filed by the respondents.
During the pendency of the revisions before the High
E Court, the respondents filed fresh eviction petitions under
Sections 11(2)(b), 11 (3), 11 (4)(i), 11 (4)(v). This time, the
respondents pleaded that the appellant had ceased to
occupy the premises since September 2001 without any
reasonable cause. The petitions were allowed by the
F Rent Control Court which was confirmed by the Appellate
Court. The High Court, however, allowed the revision
petitions filed by the appellant and remitted the matter to
the Rent Control Court for fresh adjudication. After
remand, the appellant filed written statement and claimed
that the petitions filed by the respondents were liable to,
G be dismissed as barred by res judicata because earlier
eviction petitions filed by them on similar grounds were
dismissed by the Appellate Court and the High Court. On
merits, the plea of the appellant was that due to financial
constraints, the appellant could not run its business
H
DUNLOP INDIA LIMITED v. A.P. RAHNA AND,ANR. 1083
effectively and profitably and it was declared sick under A
the Sick Industrial Companies (Special Provisions) Act,
1985 by BIFR and appeal against the same was pending
before the AAIFR. The Rent Control Court, Appellate
Court and the High Court concurrently held that the
appellant had ceased to occupy the premises since B
September 2001, and that the pendency of the
proceedings under the SICA, 1985 could not be
construed as a reasonable cause for non-occupation of
the premises. The instant appeals were filed challenging
· the order of the High Court. c
Dismissing the appeals, the Court
·_ .. . . . . l ;
HELD: 1.1. The word "occupy" used in Section
· 11(4)(v) of the Kerela Buildings (Lease and ·Rent Control) ·
· Act, 1965 is not synonymous with legal possession in D·
technical sense. It means actual p'ossession of the
tenanted building or use thereof for the purpose for
which it is let out. If the building is let out for residential
purpose and the tenant is shown to· be continuously
absent from the building for six months, the Court may E
presume that he has ceased to occupy the building or
abandoned it. If the building is let out for business or
commercial purpose, complete cessation of the business/
commercial activity may give rise to a presumption that
the tenant has ceased to occupy the premises. In either F,
case, legal possession of the building by the tenant will,
by itself, be not sufficient for refusing an order of eviction
unless the tenant proves that there was reasonable
cause for his having ceased to occupy the building; [Para
17] [1107-D-F]
G
Paulina Joseph v. ldukki District Wholesale Co-operative
ConsumerStores Ltd. (2006) 1 KLT 603 - approved.
1.2. The initial burden to show that the tenant has
ceased to occupy the building continuously for 6 months H
1084 SUPREME COURT REPORTS [2011] 5 S.C.R.
A is always on the landlord. He has to adduce tangible
evidence to prove the fact that as on the date of filing the
petition, the tenant was not occupying the building
continuously for 6 months. Once ·such evidence is
adduced, the burden shifts on the tenant to prove that
B there was reasonable cause for his having ceased to
occupy the tenanted premises for a continuous period of
6 months. No strait-jacket formula can be evolved for
determining as to what is the reasonable cause and each
case is required to be decided keeping in view the nature
c of the lease, the purpose for which the premises are let
out and the evidence of the parties. If the building, as
defined in Section 2(1) is let out for industrial or
commercial/business purpose and the same is not used
for the said purpose continuously for a period of six
months, the tenant cannot plead financial crunch as a
0
ground to justify non occupation of the building unless
cogent evidence is produced by him to prove that he
could not carry on the industrial or commercial/business
activity due to fiscal reasons which were beyond his
control. If the tenant does not use the building for the
E purpose for which it is let out, he cannot be said to be
occupying the building merely because he has put some
furniture or articles or machinery under his lock and key.
[Para 18] [1107-G-H; 1108-A-D)
F Ram Dass v. Davinder (2004) 3 SCC 684: 2004 (3)
SCR 518 - relied on.
Brown v. Brash (1948) 1 All. E.R. 922 - referred to.
Achut Pandurang Kulkarni v. Sadashiv Ganesh
G PhulambrikarmAIR 1973 Born. 210; Ananthasubramania Iyer
v. Sarada Amma 1978 KLT 338; Mathai Antony v. Abraham
(2004) 3 KLT 169; Kurian Thomas v. Sreedharan Menon
(2004).3 KLT 326; Simon & Ors. v. Rappai (2008) 2 KLJ 488
- approved.
DUNLOP INDIA LIMITED v. A.P. RAHNA ANO ANR. 1"085
1.3. In this case, the Rent Control Court, after detailed A
scrutiny of the pleadings and the evidence of the parties
recorded a finding · that while the landowners
(respondents) succeeded in proving that the tenant
(appellant) had ceased to occupy the suit premises for a
period exceeding six months, the latter could not prove B
that it was occupying the premises or that non
occupation thereof was for a reasonable cause. The· Rent
Control Court took cognizance of the appellant's plea that
it was carrying on business activities from the suit
premises with reduced staff strength but discarded'the c
same by observing that the relevant records like the
attendance register, muster roll, wage register had not
been produced and no evidence was adduced to prove
payment of electricity bills and sale and purchase of
goods. The High Court also analysed the pleadings and D
evidence of the parties and concurred with the findings
recorded by the Rent Control Court. As against this, the
appellant did not produce any evidence to prove physical
occupation of the premises or any business transaction:
It also failed to produce any evidence to show that there E
was reasonable cause for non occupation of the suit
premises. [Para 28] [1119-D-G]
2. The argumer:its that the second set of rent control
petitions should have been dismissed as barred by res
judicata because the issue raised therein was directly and F
substantially similar to the one raised in the first set of
rent control petitions was not tenable for the reason that
while in the first set of petitions, the respondents had
sought eviction on the ground that the appellant had
ceased to occupy the premises from June, 1998, in the G
second set of petitions, the period of non occupation
commenced from September, 2001 and continued till the
filing of the eviction petitions. That apart, the evidence
produced in the first set of petitions was not found
H
1086 SUPREME COURT REPORTS [2011) 5 S.C.R.
A acceptable by the Appellate Authority. because till
2.8.1999, the premises were found kept open and alive for
operation. The Appellate Authority also found that in spite
of extreme financial crisis, the management had kept the
business premises open for operation till 1999. In the
B second round, the appellant did not adduce any
evidence worth the name to show that the premises were
kept open or used from September, 2001 onwards. The
Rent Controller took cognizance of the notice fixed on the .
front shutter of the building on 1.10.2001 that the
c company is a sick industrial company under the 1985 Act
and operation has been suspended with effect from
1.10.2001; that no activity had been done in the premises
with effect from 1.10.2001 and no evidence was produced
to show attendance of the staff, payment of salary to the
employees, payment of electricity bills from September,
0
2001 or that any commercial transaction was done from
the suit premises. It is, thus, evident that even though the
ground of eviction in the two sets of petitions was similar,
the same were based on different causes. Therefore, the
evidence produced by the parties in the second round
E was rightly treated as sufficient by the Rent Control Court
and the Appellate Authority for recording a finding that
the appellant had ceased to occupy the suit premises
continuously for six months without any reasonable
cause. [Para 29] [1119-H; 1120-A-G]
F
3.1. The appellant was declared a sick industrial
company on 22.6.1998 and the Operating Agency was
appointed under Section 17(3) of the 1985 Act to examine
the viability of the company. After several hearings, the
G BIFR passed order directing the appellant to sort out all
pending issues with secured creditors, Central/State
Governments, TllC, KSllDC and TNSEP and submit a
revised comprehensive and fully tied up rehabilitation
scheme to the Operating Agency. For the next about five
H
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1087
years, no tangible step was shown to have taken by the A
appellant for revival of its business activities. In August
and November, 2006, the appellant filed applications
before the BIFR seeking its permission for issue of two
crore equity shares of Rs. 10/- each fully paid up at par
to the company's promoters and/or its associates on B
private placement basis against full consideration to be·
utilized for rehabilitation. Thereupon, the BIFR passed
order dated 16.3.2007. Three appeals were filed against
that order. The AAIFR dismissed the appeals and held
that in view of the various orders, the net worth of the c
appellant has tur\ned positive and it can no longer be
treated as sick industrial company. Before the Rent
Control Court, the appellant had neither pleaded nor any
evidence was produced to show that financial stringency
was due to the reasons beyond its control and on that
0
account, the suit premises could not be used from
September, 2001 onwards for the purpose specified in
the lease deeds. Therefore, the so called financial
stringency cannot be construed as reasonable cause
within the meaning of Section 11 (4)(v). [Para 32] [1124-E- E
G; 1125-A-E]
3.2. The order passed by the AAIFR has no bearing
on the decision of the issues raised by the respondents
in the context of Section 11(4)(v) of the 1965 Act because
what was required to be considered by the Rent Control F
Court was whether as on the date of filing the petition the
appellant had ceased to occupy the premises
continuously for a period of six months without
reasonable cause. The improvement in the financial
health of the appellant after many years cannot impinge G
upon the concurrent finding recorded by the Rerit Control
Court and the Appellate Authority that the respondents
had succeeded in making out a case for eviction under
Section 11 (4)(v) and that there was no reasonable cause
H
1088 SUPREME COURT REPORTS [2011] 5 S.C.R.
A for the appellant to have ceased to occupy the suit
premises continuously for a period of six months. [Para
33) [1125-E-H]
Shree Chamundi Mopeds Ltd. v. Church of South India
B TrustAssociation (1992) 3. SCC 1: 1991 (1) Suppl SCR 46 ;
GujaratStee/ Tube Co. Ltd. v. Virchandbhai B. Shah (1999)
8 SCC 11: 1999(3) Suppl. SCR 624 ; Carona Ltd. v.
Parvathy Swaminathan and Sons (2007) 8 SCC 559: 2007
(10) SCR 656 - referred to.
c Case Law Reference:
(2006) 1 KLT 603 approved Para 13, 26
2004 (3) SCR 518 relied on Para 20
(1948) 1 All. E.R. 922 approved Para 21
D
AIR 1973 Born. 210 approved Para 22
(2004) 3 KLT 326 approved Para 25
1978 KLT 338 approved Para 23
E
(2004) 3 KLT 169 approved Para 24
(2008) 2 KLJ 488 referred to Para 27
1991 (1) Suppl. SCR 46 referred to Para 30
F 1999 (3) Suppl. SCR 624 referred to Para 31
2007 (10) SCR 656 referred to Para 32
.• 3911CIVIL
. APPELLATE JURISDICTION : Civil Appeal No .
of2011 .
G
From the Judgment & Order dated 27.7.2009 of the High
Court of Kerala at Ernakulam in RCR No. 134 of 2009.
H
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1089
WITH A
C.A. 3912 of 2011.
R.E Nariman, C. Mukund, Ashok Jain, Pankaj Jain, Bijoy
Kumar Jain for the Appellant.
B
. S. Gopakumaran Nair, C.A. Sundaran, N.M. Mohamed
Ayub, K.N. Madhusoodhanan (for T.G. Narayanan Nair), Romy
Chacko, Jasaswani Mishra for the Respondents.
The Judgment of the Court was delivered by c
G.5. SINGHVli J. 1. Leave granted.
2. These appeals are directed against judgment dated
27.7.2009 of the Division Bench of the Kerala High Court
whereby the revisions filed by the appellant against the order D
passed by District Judge, Ernakulam (hereinafter referred to
as, "the Appellate Authority") under Section 18 of the Kerala
Buildings. (Lease and Rent Control) Act, 1965 (for short, "the
1965 Act") were dismissed and the direction given by lllrd
Additional Munsiff and Rent Control Court, Ernakulam (for E
short, "the Rent Control Court") for vacating the suit premises
was confirmed.
· 3. A.B. Abdul Khader (predecessor of the respondents)
leased out the suit premises comprised in Suryey Nos.341/1
and 2 situated at Ernakulam village to the appellant for its F
godown and office for a period of 10 years with effect from
1.12.1966. After 2 years and about 2 months, the parties
executed two lease deeds dated 3.2.1969, which were duly
registered. For the sake of reference, the relevant portions of
the lease deed executed in respect of Survey No.341/1 G
measuring 83 cents are extracted below:
"THIS DEED OF LEASE made on the Third day of
February One Thousand Nine Hundred and Sixty Nine
corresponding to the Fourteenth day of Magha One H
1090 SUPREME COURT Rl;PORTS [2011] 5 S.C.R.
A thousand Eight Hundred and Ninety One of the Sakha Era
BETWEEN A.B. ABDUL. KHADER son of
Alumkaparambli Bava, Indian National, Businessman,
aged Forty five years, residing at Alumkaparampil, Chittor
Road, Ernakulam in the City of Cochin in Ernakulam
B District in Kerala State (hereinafter called "the Lessor"
which expression shall unless excluded by or repugnant to
the context include his heirs, executors, administrators and
assigns) of the One Part AND DUNLOP INDIA LIMITED,
formerly THE DUNLOP RUBBER COMPANY (INDIA)
c LIMITED, a Company duly incorporated in India having its
Registered office at Dunlop House, 57-B Free School
Street, Calcutta, herein represented by its duly constituted
attorney G.S. Krishna son of Govindarajapuram
Subramaniam, Indian National, Business, Executive, aged
Forty four years, residing at 26, Dr. Hedge Road,
D
Nangumbakkam in the City of Madras (hereinafter called
"the Lessee" which expression shall unless excluded by or
repugnant to the context include its successors and
ass'igns) of the Other Part.
E WITNESSES as follows:-
1. In consideration of the rent hereinafter reserved and
of the covenants on the part of the Lessee hereinafter
stipulated, the Lessor hereby demises unto the Lessee all
F those pieces of parcels of land situate in Ernakulam Town
comprised in Survey Number 341 Sub Division 1 (part)
admeasuring 83 cents equivalent to 33 acres 58.844 sq.
meteres together with the buildings and structures erected
·thereon more particularly described in the Schedule
hereunder written together with all the fixtures, fittings,
G
pathways, passages, rights and privileges appurtenant
thereto TO HOLD the same unto the Lessee for a term of
ten years from 1st December 1966 paying therefore during
the continuance of the lease a monthly rent of Rs.4:0001-
(Rupees Four Thousand) only on the days and in the
H
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1091
[G.S. SINGHVI, J.]
· manner and subject as hereunder provided. A
(a) xxx xxx
(b) xxx xxx xxx
(c) The Lessee shall permit the Lessor or his B
authorised agents with or without workmen during business
hours to enter upon the demised premises for the purpose
of viewing the condition thereof and from time to time for
the purpose of effecting the necessary repairs and
maintenance as hereunder provided. c
(d) The Lessee shall deliver up the said demised
premises on termination of the lease in as good order and
condition as they were in at the time when the lease
hereby created commenced subject to determination due D
to normal wear and tear and defects, if any, for want of,
proper repair and maintenance which is the liability of the · · · ·
lessor as hereinafter mentioned.
2. The Lessor hereby covenants with the Lessee as
follows:- E
(a) Subject to the due observance and performance
of the terms, covenants and conditions by the
Lessee herein on their part to be observed and
performed the lessee shall have the right during the
F
continuance of the lease to use the premises
without interruption by the Lessor or any person
claiming under or in trust for him.
(b) xxx xxx xxx
G
(c) xxx xxx xxx
3. Provided always and it is mutually agreed by and
between the parties hereto as follows:
(a) Notwithstanding the period of lease herein before H
1092 SUPREME COURT REPORTS [2011) 5 S.C.R.
A provided the Lessee shall have the option to terminate the
lease by giving three months notice in writing to the Lessor
at any time during the continuance of this Lease.
(b) The lessees shall have the option to renew the lease
for a further period of ten years at the same rent and other
B
terms, covenants and conditions as existed during the
initial period of ten years save and except the Clause for
.renewal provided the Lessee gives notice in writing to the
Lessor three months before the expiry of the initial period
of ten years of the Lessee's intention to exercise the
c option.
(c) xxx xxx xxx
(d) xxx xxx xxx
D (e) xxx xxx xxx
(f) xxx xxx xxx
(g) The Lessee shall be at liberty at its own costs to
E construct at any time and at any place of the demised
premises counters, strong rooms and safe deposit vaults
and to fix, erect, bring in or upon or fasten to the demised
premises and to alter and rearrange from time to time,
furniture fixtures and fittings which the Lessee may require
for its business such as partition screens, counters,
F
platforms, shelves, cases, cupboards, heavy safes,
cabinets, lockers, strong room doors, vault doors, cabinets
of any size and weight, steel collapsible gates, ventilators,
grills, shutters, sunblinds, gas and electric fittings, stoves,
light, fans, air conditioners, sinks and other equipment,
G fittings, articles and things all of which the Lessee shall be
at liberty to remove at any time at its pleasure, before the
expiration or sooner determination of the tenancy without
objection on the part of the Lessor and the Lessee shall
make good the damage, if any, which may be thereby
H
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1093
[G.S. SINGHVI, J.]
caused to the demised premises." A
4. The appellant exercised the option for extension of the
term of lease but did not vacate the premises at the end of
extended period. After the death of A.B. Abdul Khader,
respondent No. 1 became owner of the property comprised in B
Survey No. 341/1 while respondent No. 2 became owner of the
property comprised in Survey No.341/2. They filed Rent Control
Petition Nos.45 and 146 of 1999 for eviction of the appellant
on the grounds specified in Section 11 (2)(b), 11 (3), 11 (4)(i)
and 11 (4)(v) of the 1965 Act. By an order dated 11.4.2001, the C
Rent Control Court allowed both the petitions and directed the
appellant to vacate the premi$es. The appeals preferred
against that order were allowed by the Appellate Authority and
the order of eviction was set aside. While reversing the finding
recorded by the Rent Control Court that the appellant had
· ceased to occupy the suit premises continuously for six months D
without reasonable cause, the Appellate Authority observed as
under:
"I find merit in the submission of the learned counsel for
the appellant that suspension of business activity on E
account of extreme financial crunch, at the same time
keeping the unit opeh and alive for operation cannot
amount to cessation of occupation without valid reasons.
Ext. C1 (a) notice conveys eloquently that there was no
intention to abandon possession and the tenant did F
continue occupation. Business activity was not being run
on account of peculiar circumstances. Till 2.8.1999 the
premises were kept open and alive for operation. It is
important to note that the employees of the tenant were not
directed not to come to the establishment on any day prior
F
to 2.8.1999. I am of the opinion that Ext.C 1(a) read as a
whole can never convey to a prudent mind that there was
cessation of occupation. Physical inability to carry on
business activity on account of financial difficulties and the
closing down of the production in the factories cannot ipso
H
1094 SUPREME COURT REPORTS (2011) 5 S.C.R.
A fact, in the facts and circumstances of the case, lead to
the conclusion that the management of the tenant (which
had kept the unit open and alive for operation till 2.8.1999)
had ceased to occupy the building till 2.8.1999. Cessation
to occupy had a physical ingredient as also a mental
B ingredient. Reading of Ext. C1(a) as a whole, I am unable
to agree that thertl was such objectionable cessation of
occupation. Though it indicates that there was no business
activity and the establishment remained defunct and idle,
there was still the intention to occupy and the hope that it
c will be possible to resume even business activity. The
inevitable conclusion flowing from Ext.C1 (a) is that the
employees were continuing to attend the offices in the
petition schedule building ·till 2.8.1999. At any rate, it would
be impossible to come. to a conclusion that there was
cessation of occupation prior to 2.8.1999 though I would
D
readily agree that there was no business activity in the
petition schedule building for some period of time even
prior to 2.8.1999. I am in these circumstances of the
opinion that Ext. C1 (a), the trump card on which the
landlords place reliance cannot deliver any crucial
E
advantage or assistance to the landlords in their attempt
to establish cessation of occupation."
The 'Appellate Authority also referred to the
Commissioner's report but refused to rely upon the same by
F recording the following reasons:
"The inspection by the commissioner was on 10th
September and monsoon season had preceded such
inspection. Some wild growth as indicated in Ext. C1
(assuming that Ext C1 can be legally taken cognizance
G
of), is not, according to me, sufficient to establish cessation
of occupation. In the light of the very specific statement in
Ext. C 1(a) that in spite of the extreme financial crunch, the
management had till 2.8.1999 kept the unit open and alive
for operation and that Ext.C1(a) notice was being issued
H
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1095
[G.S. SINGHVI, J.]
on 2.8.1999 as management was convinced that there is A
no prospect of running the company immediately must·
definitely convey to the court that there was no cessation .
of occupation prior to 2.8.1999 at any rate. The wild growth
perceived by the commissioner and reported in Ext. C1
cannot in these circumstances tilt the scales in favour of B
the landlords. I am in these circumstances of the opinion
that the learned Rent Control Court erred in coming to the
conclusion that the landlords have succeeded in proving
cessation of occupation for a period of ·6 months
imtnediately prior to the filing of the petitions without c
reasonable cause.· I am unable to concur with the
conclusion of the learned Rent Control Court on this
aspect. I am in these circumstances satisfied that the
challenge raised on this ·ground also deserves to· be
upheld."
D
5. Civil Revision Petition Nos.579. and 580 of 2002 filed
by the respondents were dismissed by the Division Bench of
the High Court vide judgement dated 18.12.2006. The High
Court agreed with the Appellate Authority that the evidence
produced by the landlord was not sufficient for recording a E
finding that the tenant had ceased to occupy the premises for .
a continuous period of six months without reasonable cause.
6. During the pendency of the revisions before the High
Court, the respondents filed fresh rent control petitions which F
came to be registered as RCP Nos.109 of 2002 and 38 of
2003 for eviction of the appellant under Sectjon 11 (2)(b), 11 (3),
11 (4)(i) and 11 (4)(v). This time, the respondents pleaded that
the appellant herein has ceased to occupy the premises since
September, 2001 without any reasonable cause. Both the
petitions were allowed by the Rent Control Court vide order G
dated 11.2.2004, which was confirmed by the Appellate
Authority by dismissing the appeals preferred by the appellant.
However, Civil Revision Petition No.368 of 2005 filed by the
appellant was allowed by the High Court vide order dated
H
1096 SUPREME COURT REPORTS [2011] 5 S.C.R.
A 18.12.2006 and the matter was remitted to the Rent Control
Court for fresh adjudication of the rent control petitions after
giving opportunity to the appellant to file counter statement and
adduce evidence.
7. After remand, the appellant filed written statement and
8
claimed that the petitions filed by the respondents were liable
to be dismissed as iJarred by res judicata because Rent
Control Petition Nos. 45 and 146 of 1999 filed by them on
similar grounds were dismissed by the Appellate Authority and
the High Court. On merits, it was pleaded that due to financial
C constraints, the appellant could not run its business effectively
and profitably and it was declared sick under the Sick Industrial
Companies (Special Provisions) Act, 1985 (for short, "the 1985
Act") by the Board for Industrial and Financial Reconstruction
(BIFR) in Case No.14of1998 and the appeal filed against the
D order of BIFR was pending before Appellate Authority for
Industrial and Financial Reconstruction (AAIFR). It was also
averred that due to financial crisis, the staff strength was
reduced to bare minimum but there was no cessation of
occupation of the suit premises.
E
8. On the pleadings of the parties, the Rent Control Court
framed the following issues:
"(1) Whether the petition is barred by resjudicata and
also u/s.15 of the Act?
F
(2) Whether RW1 is having any authority to represent
the respondent?
(3) Whether there is a commercial lease between the
G parties as alleged?
(4) Whether the Petitioners are entitled for an order of
eviction u/s.11 (2)(b) of the Act?
(5) Whether the Respondent ceased to occupy the
H
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1097
[G.S. SINGHVI, J.]
petition schedule buildings continuously for six A
months?
(6) Whether there is any reasonable cause for the
cessation of occupation if any?
(7) Whether the Petitioners are entitled for an order of 8
eviction u/s 11(4)(v) of the Act?
(8) Relief and costs?"
9. After considering the pleadings and evidence of the c
parties, the Rent Control Court held that the petitions filed by
the respondents· were not barred by ~es judicata and Section
15 of the 1965 Act cannot be invoked for denying reli.ef to them
because two sets of rent control petitions were based on
different causes. However, the. respondents' plea that the D
appellant was in arrears of rent was rejected on the ground that
no evidence had been produced by them to prove the same.
The Rent Control Court then considered the question whether
the appellant had ceased to occupy the suit premises since
September, 2001 without reasonable cause and answered the
same in affirmative. The Rent Control Court referred to the E
· evidence produced by the parties including the reports Exhibits
C1 and C2 produced by Advocate Commissioners PW2 and
PW3 and recorded the following observations:
,.
'
"(i) From Ext.C1 report filed by PW2 it can be seen that F
the two entrance gates on the northern side of the petition
schedule property in O.S. 109/02 is found rusted and
closed. The boundary fencing on the northern side is found
damaged.
(ii) The land surrounding the side petition schedule building G
is fully covered with grass and shrubs and PW2 the
commission even found it difficult to walk through the
premises. The sheds in the said property were seen in
dilapidated condition and the commissioner could not go
H
1098 SUPREME COURT REPORTS [2011] 5 S.C.R.
A near to the shed as it was covered with tall bushes and
shrubs.
(iii) The eastern wall of the petition scheduled building in
· RCP 109/02 had to rusted shutters which was seen closed.
B (iv) It is also reported that the commissioner could not enter
into the buildings as it was closed. On looking through the
glass window PW2 could see some furniture inside the
building which are full of dust, damaged and unfit for use.
Though the service line of electric connection to the petition
c schedule building was there commissioner verified and
found that the electric connection being disconnected.
(v) PW3 is the advocate commissioner who had inspected
the petition schedule building RCP No.38/03 and filed
D Ext.C2 report it can be seen that the petition schedule
. building in RCP 38/2003 was lying closed at the time of
both the inspections made by PW3. The commissioner has
also noted the notice fixed in the front shutter of the petition
schedule building by Sri A.K. Agarwal Company Secretary
on 1.10.2001 stating that the Respondent company is a
E
sick industrial company under the Sick Industrial
Companies (Special Provisions) Act and operations at
Kochi has been suspended w.e.f. 1.10.2001 onwards. It
is also mentioned in ex.C2 that the front shutters and the
shutt~rs provided at the eastern side are full of dust and
F the same were rusted due to non use, and the entire
compound around the petition schedule building are full of
bush and the bushes are seen at some places grown on
to the petition schedule building and some other places
grown to the roof of petition schedule building.
G
(vi) The commissioner has also noted five calendars for
year 2001 seen inside the rooms in the petition schedule
building. PW3 also has noted that the switchboard
provided at the eastern and western wall of the petition
H schedule building were not having electricity supply. It is
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1099
[G.S. SINGHVI, J.]
also noted that the four iron gates provided for the A
compound were covered with dust and rust due to non use.
(vii) Even though the condition of the petition schedule
buildings happened to be as noted by PW2 and PW3 to
a limited extent to non-maintenance and repairs it cannot
8
be found that it happened only due to non-maintenance and
repairs ..
(viii) The calendars for the year 2001 noted by PW3 inside
the petition schedule building in RCP No.38/03 and the
notice dated 01.10.2001 affixed at the front shutter of the C
same building clearly shows that both the petition schedule
buildings were not been opening from 1.10.2001 towards
till the inspection date. Since the petition schedule buildings
were not opened since September, 2001 the inability of
the Petitioner to carry out the repairs and maintenance also D
is to be looked into."
(emphasis supplied)
10. The Rent Control Court then considered the plea of the
appellant that on account of pendency of the proceedings under E
the 1985 Act, the staff strength was reduced to bare minimum
but discarded the same on the ground that staff attendance
register, muster roll, wages register maintained in the office as
also the document showing purchase and sale of the goods,
payment of electricity charges etc. had not been produced F
showing payment of the dues since September, 2001 and
observed:
"The specific case of RW1 is that due to the proceedings
under the provisions of Sick Industrial Companies (Special G
Provisions} Act, the staff strength of the Respondent
company was reduced to bare minimum at the petition
schedule buildings. According to RW1 even though there
were such proceedings respondent was functioning in tne
schedule buildings with minimum staff. During cross H
1100 SUPREME COURT REPORTS [2011] 5 S.C.R.
A examination RW1 admitted that the staff attendance
register, muster roll wages register etc are maintaining
in the petition schedule buildings. She also admitted that
they are maintaining stock register in the petition
schedule buildings. But none of there documents are
B produced before court. According to RW1 she omitted to
produce these documents. Had these documents for the
relevant period come in illegible/. the details regarding the
strength of the staff and the business being carried on is
the petition schedule buildings would have been revealed.
c She also admitted that documents are maintained
regarding the purchase and sale done in the petition
schedule buildings but those documents are a/so not
produced before court. .. . . . . . .. . . . .. . The specific case of
PW1 is that the electric connection was disconnected
more than 1~ years before. But according to RW1 the
D
electricity connection was disconnected only two months
prior to her examination before court. If there was actually
electric supply to the petition schedule buildings and the
Respondents had paid the electricity charge definitely RW1
could have produced the electricity bill pertaining to the
E petition schedule buildings. Though RW1 stated that she
can produce the electricity bill from 2001 September
onwards pertaining to the petition schedule buildings
neither of them has been produced till now. From all these
it can be seen that the Respondents were not occupying
F the petition schedule buildings from 2001 September
onwards, and they had ceased to occupy the petition
schedule buildings continuously for more than six
months.
G According to RW1 respondent could not conduct the
·· business in full swing in the petition schedule building due
to BIFR and AAIFR proceedings. Ext.89 is the order of
AAIFR, New Delhi in appeal No.1/02 wherein the
Respondent is the appellant. On perusal of Ext.89 it can
be seen that several reliefs and concessions were given
H
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1101
[G.S. SINGHVI, J.]
to the Respondent company by the AAIFR. But as per A
ext.89 no restriction is seen imposed on the work of
respondent company all together or particularly in the
schedule buildings at Cochin ......................................... As
already observed respondents could not produce any of
the mandatory prescribed registers such as stock register, B
day book, muster roll, attendance register wages register
etc. to show that any business were being carried out in
the petition schedule buildings even with minimum staff.
Even it was specifically put to RW1 that due to the
proceedings before BIFR and AA/FR, whether the board c
of directors was resolved to reduce the staff strength she
answered that the staff were told not to come and they
have agreed for the same. It is something unbelievable.
RW1 has produced Ext.B13 series to B25 series invoices
to show that they are conducting business to the D
. scheduled property. But on going through ext.B13 series.
to ext.B25. series it cannot be found that those
transactions were made through Ka/oar Office where in
the petition schedule building situates as these invoices
were given to the Chennai office of respondent. The
learned counsel for the Petitioner has pointed out that in E
ext.811 series and 812 series after the Chennai address
of the Respondent company it is seen typed in another
machine in Ext.811 series and written in another
handwriting in Ext.812 series, "through Kaloor Office
Cochin". The same and address of the purchasing dealer F
in all these documents are the Chennai address of the
Respondent company. Ext.811 series to ext.825 series
cannot be relied on to show that business was being
conducted in scheduled buildings. It is also to be noted
that ExtB 11 series to B25 series are of the year 2006 and G
these do not in any help the Respondents to show that
any business was being conducted in the petition
schedule building in between· September, 2001 and filing
of these RCPs. It is also admitted by RW1 that copy of
invoice are to be given at the check post. But ext. B 11 to H
1102 SUPREME COURT REPORTS [2011] 5 S.C.R.
A 825 series produced are having 4 to 6 copies of each
invoices. If while passing the sales tax check post copy
of invoices were given as stated there would not have
been such number of copies at in ext. 811 to 825 series.
Therefore the genuineness of these documents are a/so
s doubtful. On a perusal of the entire evidence it can be
seen that the Respondent has failed to prove that the
cessation of occupation of petition schedule buildings for
the continuous period of more than six months were due
to the restrictions imposed by BIFR and AAIFR. Hence
c these points are found in favour of the Petitioners."
(emphasis supplied)
11. On the basis of above analysis of the pleadings and
evidence, the Rent Control Court concluded that the appellant
D had ceased to occupy the suit premises since September, 2001
without any reasonable cause and, accordingly, directed it to
vacate the premises.
12. The Appellate Authority independently examined the
E pleadings and evidence of the parties and reiterated the finding
recorded by the Rent Control Court that the appellant had
ceased to occupy the premises since September, 2001 and
that the pendency of the proceedings under the 1985 Act
cannot be construed as a reasonable cause for non occupation
F of the premises.
13. The Division Bench of the High Court, though not
required in law to do so, minutely scrutinized the evidence
produced by the parties and concurred with the Rent Control
Court and the Appellate Authority that the respondents had
G succeeded in making out a case for eviction of the appellant
under Section 11 (4)(v). The High Court referred to the
expression "reasonable cause" used in Section 11 (4)(v), the
judgment in Paulina Joseph v. ldukki District Wholesale Co-
operative Consumer Stores Ltd. (2006) 1 KLT 603 and
H observed:
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1103
[G.S. SINGHVI, J.]
"Interpreting the scope and meaning of "reasonable cause" A
provided in section 11(4)(v) of the Act a Division Bench
of this Court in Paulina Joseph vs ldukki District Wholesale
Co-operative Consumer Stores Ltd., (2006 (1) KLT 603)
held that if there is a plausible explanation to the question
why the business was not run in the premises continuously, . B
it may be a relevant fact in considering whether there was
reasonable cause for cessation of occupation. Butit is held
that existence of such reasonable cause depends on the
facts and circumstances of each cases. It is further held
that the occupation of the building depends on the purpose c
for which it is let and the purpose for which it is used. The
nature of the business and the requirement of the physical
presence or otherwise of the tenant in the building for the
conduct of the business is a relevant fact. But in this case
on considering the facts the requirement of physical
0
presence is highly essential to observe that the tenant
company is continuing in occupation, because the tenanted
premises is occupied as their office and godown. The
burden to prove that there is reasonable cause for non
occupation is solely on the tenant whei:i it is proved that.
there is cessation of physical occupation. E
The question to be examined is whether on the facts of this
case the tenant was successful in proving ariy such
reasonable cause. The rent control petitions were filed
during the years 2002 and 2003. It has come out in F
evidence that the tenant ceased to occupy the premises
since last so many years from the date of filing of the rent
control petition itself. Further it has come out in evidence
that since the lapse of more than six years from filing of
rent control petitions, still as on today, it is conceded that G
the company could not resume business of physical
occupation at the tenanted premises. Therefore we have
no hesitation to hold that the tenant was not successful in
establishing any genuine intention or hope of reviving the ·
physical occupation not it was successful it establishing H
1104 SUPREME COURT REPORTS [2011) 5 S.C.R.
A any reasonable cause for the cessation of occupation."
14. Shri R.F. Nariman, learned senior counsel for the
appellant argued that the impugned judgment and the orders
passed by the Rent Control Court and the Appellate Authority
are liable to be set aside because the Rent Control Petition
8
Nos. 109 of 2002 and 38 of 2003 were barred by res judicata.
Learned senior counsel submitted that the issue whether the
appellant had ceased to occupy the building continuously for
six months without reasonable cause had already been decided
C against the respondents in the proceedings arising out of Rent
Control Petition Nos.45 and 146 of 1999 and, as such, the
second set of petitions filed on the same cause were not
maintainable. He further submitted that even though two sets
of rent control petitions related to different periods, the evidence
produced by the respondents to prove their case with reference
D to Section 11 (4)(v) was substantially the same and the Rent
Control Court committed serious error by passing an order of
eviction ignoring the contrary finding recorded by the Appellate
Authority and the High Court in the earlier round of litigation and
this error was repeated by the Appellate Authority and the High
E Court while dismissing the appeals and revisions filed by the
appellant. Shri Nariman argued that the finding recorded by the
Rent Control Court and the Appellate Authority that the appellant
had ceased to occupy the suit premises continuously for six
months without reasonable cause was based on misreading
F of evidence and the High Court committed serious error by
approving the same ignoring the finding recorded in the earlier
round of litigation, which had become final. Learned senior
counsel emphasized that due to pendency of proceedings
under the 1985 Act, the appellant could not effectively use the
G suit premises, but that did not justify a conclusion that it had
ceased to occupy the premises. He then submitted that the
pendency of case under the 1985 Act was, by itself, sufficient
for recording a finding that there was reasonable cause for the
appellant to have ceased to occupy the suit premises. Shri
H Nariman invited our attention to order dated 3.3.2008 passed
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1105
[G.S. SINGHVI, J.]
by AA.IFR vide which the appeals filed against the order of the A
BIFR were dismissed and argued that the impugned order may
be set aside because the appellant's financial condition has
considerably improved ..
15. S/Shri S. Gopakumaran Nair and C.A. Sundaram, 8
learned senior counsels for the respondents argued that the
concurrent findings recorded by the Rent Control Court and the
Appellate Authority on issue Nos.5, 6 and 7, which have been
approved by the High Court, do not suffer from any legal infirmity
warranting interference by this Court. Learned senior counsel C
candidly admitted that the order of eviction passed in the earlier
round of litigation was reversed by the Appellate Authority and
the revisions filed by the respondents were dismissed by the
High Court, but argued that the findings recorded in those
proceedings could not be treated as res judicata qua the
petitions filed in 2002/2003 because the same were based on D
a different cause. Learned counsel pointed out that in the first
round, the respondents had sought eviction under Section
11 (4)(v) by alleging that the appellant had ceased to occupy
the suit premises from June, 1998 and in the second set of
petitions, eviction was sought on the ground that the appellant E
had ceased to occupy the premises from September, 2001.
Learned counsel pointed out that while the respondents had
succeeded in proving that the suit premises were vacant since
September, 2001, the appellant could not produce any tangible
evidence to prove occupation of the premises or that there was F
reasonable cause for its having ceased to occupy the suit
premises. They emphasized that the Rent Control Court and
the Appellate Authority had rightly discarded the evid~nce of
RW1 on the issue of continued occupation of the suit premises
because she failed to produce the staff attendance register, G
muster rolls, wage registers, electricity bills and payment thereof
as also documents showing purchase and sale of the goods
from the suit premises.
· 16. We have considered the respective submissions.
H
1106 SUPREME COURT REPORTS [2011] 5 S.C.R.
A Section 11 ( 1) contains a non obstante clause and declares that
notwithstanding anything to the contrary contained in any other
law or contract a tenant shall not be evicted whether in execution
of a decree or otherwise except in accordance with the
provisions of the Act. The first proviso to Section 11 (1) carves
B out an exception and lays down that nothing contained in this
section shall apply to a tenant whose landlord is the State
Government or the Central Government or other public authority
notified under this Act. Second proviso to Section 11 (1) carves
out another exception and lays down where the tenant denies,
c the title of the landlord or claims right of permanent tenancy,
the Rent Control Court shall decide whether the denial or claim
is bonafide and if it records a finding to that effect, the landlord
shall be entitled to sue for eviction of the tenant in a Civil Court
and such court can pass a decree for eviction on any of the
grounds enumerated in Section 11 even though the Court may
D find that such denial does not involve forfeiture of the lease or
that the claim is unfounded. Section 11 (4)(v) of the Act which
has bearing on this case reads as under:
"(1) to (3) xxx xxx xxx
E
(4) A landlord may apply to the Rent Control Court for an
order directing the tenant to put the landlord in possession
of the building,-
(i) to (iv) xxx xxx xxx
F
(v) if the tenant ceases to occupy the building continuously
for six months without reasonable cause."
The definition of the term "building" contained in Section
G 2(1) is as under:
"(1). "building" means any building or hut or part of a
building or hut, let or to be let separately for
residential or non residential purpose and includes-
H (a) the garden grounds well's tanks and
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1107
[G.S. SINGHVI, J.]
structures if any, appurtenant to such building, A
hut, or part of such building or hut, and let or ·
to be let along with such building or hut;
(b} any furniture supplied by the landlord for use
in such building or hut or part of a building
8
or hut
(c} any fittings or machinery belonging to the
landlord, affixed to or installed in such
building or part of such building, and intended
to be used by the tenant for or in connection C
with the purpose for which such building or
part of such building let or to be let,
but does not include a room in a ho.tel or boarding
house .... " D
17. The word "occupy"used in Section 11(4)(v) is not
· synonymous with legal possession in technical sense. It means
actual possession of the tenanted building or use thereof for
the purpose for which it is let out. If the building is let out for
residential purpose and the tenant is shown to be continuously E
absent from the building for six months, the Court may presume
that he has ceased to occupy the building or abandoned it. If
the building is let out for business or commercial purpose,
complete cessation of the business/commercial activity may
give rise to a presumption that the tenant has ceased to occupy F
the premises. In either case, legal possession of the building
by the tenant will, by itself, be not sufficient for refusing an order
of eviction unless the tenant proves that there was reasonable
cause for his having ceased to occupy the building.
G
18. The initial burden to show that the tenant has ceased
to occupy the building continuously for 6 months is always on
the landlord. He has to adduce tangible evidence to prove the
fact that as on the date of filing the petition, the tenant was not
occupying the building continuously for 6 months. Once such
H
1108 SUPREME COURT REPORTS [2011] 5 S.C.R.
A evidence is adduced. the burden shifts on the tenant to prove
· ~tha·t there was reasonable cause for his having ceased to
occupy the tenanted premises for a continuous period of 6
months. No strait-jacket formula can be evolved for determining
as to what is the reasonable cause and each case is required
s to be decided keeping in view the nature of the lease, the
purpose for which the premises are let out and the evidence
of the parties. If the building, as defined in Section 2(1 ), is let
out for industrial or commercial/business purpose and the same
is not used for the said purpose continuously for a period of
c six months, the tenant cannot plead financial crunch as a ground
to justify non occupation of the building unless cogent evidence
is produced by him to prove that he could not carry on the
industrial or commercial/business activity due to fiscal reasons
which were beyond his control. If the tenant does not use the
building for the purpose for· which it is let ;)Ut, he cannot be said
0
to be occupying the building merely because he has put some
furniture or articles or machinery under his lock and key.
19. At this stage, we may notice some precedents which
throw some light on the true interpretation of the expressions
E "occupy" and "reasonable cause" used in Section 11 (4)(v) of
the 1965 Act.
20. In Ram Dass v. Davinder (2004) 3 SCC 684, this
Court interpreted Section 13(2)(v) of the Haryana Urban
F (Control of Rent and Eviction) Act, 1973.in terms of which an
order of eviction could be passed against the tenant if he is
shown to have ceased to occupy the premises continuously for
a period of 4 months without reasonable cause. Respondent
Davinder was tenant in the shop belonging to appellant-Ram
G Dass. The appellant filed a petition for eviction of the
respondent on the ground that he had ceased. to occupy the
shop for a continuous period of 4 months without any reasonable
cause. The Rent Controller analysed the pleadings of the
parties and evidence produced by them and held that the
appellant has been able to prove that the respondent had
H
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1109
[G.S. SINGHVI, J.]
ceased to occupy the premises for a continuous period of more A
than 4 months and there was no reasonable cause for doing
so. The plea of the respondent that he had kept the shop closed
intermittently due to sickness was not accepted by the Rent
Controller. The Appellate Authority, on an independent
evaluation of the evidence, confirmed the finding of the Rent B
Controller. The High Court allowed the revision filed by the
respondent and set aside the orders of the Rent Controller and
the Appellate Authority. This Court reversed the order of the
High Court and restored the one passed by the Rent Controller.
The Court highlighted the distinction between the terms c
"possession" and "occupy" in the context of Rent Control
Legislation in the following words: ·
"The terms "possession" and "occupy" are in common
parlance used interchangeably. However, in law,
possession over a property may amount to holding it as D
an owner but to occupy is to keep possession of by being
present in it. The rent control legislations are the outcome
of paucity of accommodations. Most of the rent control
legislations, Jn force in different States, expect the tenant
to occupy the tenancy premises. If he himself ceases to E
occupy and parts with possession in favour of someone
else, it provides a ground for eviction. Similarly, some
legislations provide it as a ground of eviction if the tenant
has just ceased to occupy the tenancy premises though
he may have continued to retain possession thereof. The F
scheme of the Haryana Act is also to insist on the tenant
remaining in occupation of the premises. Consistently with
what has been mutually agreed upon, the tenant is
expected to make useful use of the property and subject
the tenancy premises to any permissible and useful activity G
by actually being there. To the landlord's plea of the tenant
having ceased to occupy the premises it is no answer that
the tenant has a right to possess the tenancy premises and
he has continued in juridical possession thereof. The Act
protects the tenants from eviction and enacts specifically H
1110 SUPREME COURT REPORTS [2011) 5 S.C.R.
A the grounds on the availability whereof the tenant may be
directed to be evicted. It is for the landlord to make out a
ground for eviction. The burden of proof lies on him.
However, the onus keeps shifting. Once the landlord has
been able to show that the tenancy premises were not
B being used for the purpose for which they were let out and
the tenant has discontinued such activities in the tenancy
premises as would have required the tenant's actually
being in the premises, the ground for eviction is made out.
The availability of a reasonable cause for ceasing to
c occupy the premises would obviously be within the
knowledge and, at times, within the exclusive knowledge
of the tenant. Once the premises have .been shown by
evidence to be not in occupation of the tenant, the
pleading of the landlord that such non-user is without
reasonable cause has the effect of putting the tenant on
D
· notice to plead and prove the availability of reasonable
cause for ceasing to occupy the tenancy premises."
(emphasis supplied)
.E 21. In Brown v. Brash (1948) 1 All. E.R. 922, the Court of
appeal was called upon to examine correctness of an order
passed by the County Court Judge, who upheld the tenant's
claim to possession of the premises and awarded damages
against the appellant for trespass. The facts of that case were
F that the premises were let out to the tenant in 1941 on a
quarterly rent of 26 pounds. In 1945, the tenant was convicted
and sentenced to serve 2 years' imprisonment for stealing 6
tones of tea. While going to jail, the tenant left physical
occupation of the premises to his mistress and two illegitimate
G children. In March 1946, the tenant's mistress left the premises
/and dropped the two children with his mother. In the meanwhile,
the landlord sold the premises. The purchaser filed an action
in July 1946 for eviction of the tenant on the ground that he had
abandoned possession. The County Court Judge held that the
tenant had not abandoned possession and that even though he
H
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1111
[G.S. SINGHVI, J~]
failed in some of his obligations under the tenancy, it was not A
reasonable to make an order for possession against him. In
December 1946, the purchaser of the original landlord
transferred the premises to the ,appellant. After release from
prison, the tenant brought an action for possession and
damages for trespass. His claim was allowed by the County B
Court Judge, who directed the appellant' to return the premises
to the respondent-tenant and also pay damages. The Court of
appeal reversed the order of the County Court Judge arid held:
. "We are of opinion that a "non-occupying" tenant prima
facie forfeits his status as a statutory tenant. But what is C
meant by "non-occupying"? The term clearly cannot cover
every tenant who for however· short a time, or however
necessary a purpose, ot with whatever intention as regards
returning, absents himself from the demised premises. To
retain possessi~n or occupation for the purpose of · D
retaining protection the tenant cannot be compelled to
. spend 24 hours in all weathers under his own roof for 365
days in the year. Ciearly, for instance, the tena11t of a
London house; who spends his week-ends in the country,
or his long vacation in Scotland, does not necessarily E
cease to be in ocQupation. Nevertheless, absence may
be sufficiently prolonged or unintermittent to compel the
inference, prima facie, of a cesser of possession or
occupation. The question is one of fact and of degree.
Assume an absence sufficiently prolonged to have this F
effect. The legal result seems to us to be as follows:-(1)
The onus is then on the tenant to repel the presumption
that his possession has ceased. (2j To repel it he must,
at all events, establish. a de facto intention on his part to
return after his absence. (3) But we are of opinion that G
neither in principle nor on the authorities can this be
enough. To suppose that he can absent himself for 5 or
10 years or more and retain possession 'and his protected
status simply by proving .an inward intention 'to return after
so protracted an absence would be to fn.istrate the spirit H
1112 SUPREME COURT REPORTS [2011) 5 S.C.R.
A and policy of the Acts as affirmed in Keeves v. Dean (1)
and Skinner v. Geary (3), (4) Notwithstanding an absence
so protracted the authorities suggest that its effect may be
averted if he couples and clothes his inward intention with
some formal, outward, and visible sign of it, i.e., instals in
B the premises some caretaker or representative, be it a
relative or not, with the status of a licensee and with the
· function of preserving the premises for his own ultimate
home-coming. There will then, at all events, be someone
to profit by the housing accommodation involved which will
c not stand empty. It may be that the same result can be
secured by leaving on the premises, as deliberate symbols
of continued occupation, furniture, though we are not clear
that this was necessary to the decision in Brown v. Draper
(4). Apart from authority, in principle possession in fact (for
it is with possession in fact and not with possession in law
D
that we are here concerned) requires not merely an
"animus possidendi" but a "corpus possessionis," viz.,
some visible state of affairs in which the animus
possidendi finds expression. (5) If the caretaker (to use
that term for short) or the furniture be removed from the
E premises otherwise than quite temporarily, we are of
opinion that the protection, artificially prolonged by their
presence, ceases, whether the tenant wills or desires such
removal or not. A man's possession of a wild bird, which
he keeps in a cage, ceases if it escapes notwithstanding
F that his desire to retain possession of it continues and that
its escape is contrary thereto. We do not think in this
connection that it is open to the tenant to rely on the fact
of his imprisonment as preventing him from taking steps
to assert possession by visible action. The tenant, it is
G true, had not intended to go to prison. He committed
intentionally the felonious act which in the events which
have happened landed him there, and thereby put it out
of his power to assert possession by visible acts after
Mar. 9, 1946. He cannot, in these circumstances, we feel,
H
DUNLOP INDIA LIMITED v. AP. RAHNA AND ANR. 1113
[G.S. SINGHVI, J.]
be in a better position than if his .absence and inaction A
had been voluntary."
(emphasis supplied)
22. In Achut Pandurang Kulkarni v. Sadashiv Ganesh
Phulambrikarm, AIR 1973 Born. 210, the learned Single Judge 8
of the Bombay High Court interpreted Section 13(1)(k) of the
Bombay Rents, Hotel and Lodging Houses Rates Control Act,
1947 the language of which is somewhat similar to Section
11 (4)(v) of the 1965 Act. The learned Single Judge referred to
order passed by Chagla, C.J. in Civil Revision Application C
No.1527/1953 decided on July 30, 1954 and observed:
"As observed by Chagla, C. J., in the above case, physical
possession by a tenant himself was not necessary.
Physical possession by other members of the family also D
is not necessary if there was reasonable cause for their
remaining absent from the premises. The question is one
of fact and degree. If there is evidence on record to show
that the tenant had something more than a vague wish to
return and that he had a real hope coupled with the E
practicable possibility of its fulfilment within a reasonable
time, it cannot be said that he had no reasonable cause
for not using the premises. In every case it is the duty of
the Court to satisfy itself that the tenant had no reasonable
cause. Absence may ba sufficiently prolonged or
unintermittent to compel the inference prima facie of a F
cesser of occupation. The onus is on the tenant in such
a case to repel the presumption and to establish that his
. possession had not ceased or that he had ceased to
occupy on account of reasonable cause. In my judgment,
this can be established if the tenant proves notwithstanding G
· the intention on his part to return after his absence, his
helplessness in remaining absent from the premises.
It is true that the tenant should have made proper attempts
to discharge the onus in the present case by producing the H
1114 SUPREME COURT REPORTS [2011] 5 S.C.R.
A orders, if not before the trial Court, at least before the
Appellate Court. That, however, as stated above, does not
permit the Courts to brush aside the requirements of
Section 13(1)(k). It is a matter for not awarding the costs.
The Court cannot ignore the nature of the tenant's services
B and his liability to be transferred when deciding the
question under Section 13(1 )(k). I do not propose to lay
down that in every case where a Government servant is
transferred and he goes on paying rent in respect of the
premises, he had reasonable cause for not using the
c premises for the purpose for which they were let. The
question will depend on the facts and circumstances of
each case. The tenant must couple and clothe his inward
intention to return, with some formal, outward and visible
sign of it, as for instance by installing some caretaker or
representative, be it a relative or not with the status of a
D
licensee and with the function of preserving the premises
for his own ultimate home-coming. It may also be that the
same result can be secured by leaving on the premises,
as a deliberate symbol of continued occupation, furniture.
As stated by Asquith L. J., in Brown v. Brash and
E Ambrose, (1948) 2 KB 247, the tenant must prove not only
animus possidendi but a corpus possessionis."
(emphasis supplied)
F 23. In Ananthasubramania Iyer v. Sarada Amma 1978
KLT 338, the learned Single Judge of the Kerala High Court
held:
"The physical absence of the tenant from the building for
more than six months would raise a presumption that he
G had ceased to occupy the building and that he had
abandoned it and that it was for the tenant to dislodge the
presumption and establish that he had the intention to
continue to occupy the tenanted premises."
H 24. The word "occupy" appearing in Section 11 (4)(v) of the
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1115
[G.S. SINGHVI, J.]
1965 Act has been interpreted by the Kerala High Court in large A
number of cases. In Mathai Antony v. Abrah.am (2004) 3 KLT
169, the Division Bench of the High Court referred to several
judgments including the one of this Court in Ram Da.ss v.
Davinder (supra) and observed:
B
"The word "occupy'' occurring in S. 11 (4)(v) has got different
meaning in different context. The meaning of the word
"occupy'' in the context of S. 11 (4)(v) has to be understood
in the light of the object and purpose of the Rent Control
Act in mind. The rent control legislation is intended to give C
protection to the tenant, so that there will not be interference
with the user of the tenanted premises during the currency
. of the tenancy. Landlord cannot disturb the possession and
·enjoyment of the tenanted prem'ises. Legislature has
guardedly used the expression "occupy" in S.11 (4)(v)
instead of "possession". Occupy in certain context D
indicates mere physical presence, but in other context
actual enjoyment. Occupation includes possession as its
primary element, and also includes "enjoyment". The word
. "occupy" sometimes. indicates legal possession in the
technical sense; at other times mere physical presence. E
We have to examine the question whether mere "physical
possession" would satisfy the word "occupy" within the
meaning of S.11 (4)(v) of the Act. In our view mere physical
possession of premises would not satisfy the meaning of
"occupation" under S. 11 (4)(v). The word "possession" F
means holding of such possession, animus possidendi,
means,. the intention to exclude other persons. The word
"occupy" has to be given a meaning so as to hold that the
tenant is actually using the premises and not mere physical
presence or possession. A learned single Judge of this G
Court in Abbas v. Sankaran Namboodiri (1993(1) KLT 76)
took the view that the word occupation is used to denote
the tenant's actual physical use of the building either by
himself or through his agents or employees. The Division
Bench of this Court of which one of us is a party H
1116 SUPREME COURT REPORTS [2011) 5 S.C.R.
A (Radhakrishnan, J.), in Rajagopalan v. Gopalan (2004 (1)
KLT SNP.54) interpreting- S. 11 (4)(v) took the view that
occupation in the context of S.I 1(4) means only physical
occupation, which requires further explanation. Occupation
in the context of S. 11 (4)(v) means actual user. If the
B landlord could establish that in a given case even if the
tenant is in physical possession of the premises, the
premises is not being used, that is a good ground for
eviction under S.11 (4)(v) of the Act. S.11 (4) uses the words
"put the landlord in possession" and not "occupation", but
c 11 (4)(v) uses the words "the tenant ceases to occupy". In
S. 11 (4)(v) in the case of landlord the emphasis is on
"possession" but in the case of tenant the emphasis is on
"occupation". The word "occupy" has a distinct meaning so
far as the Rent Act is concerned when pertains to tenant,
that is, possession with user."
D
25. In Kurian Thomas v. Sreedharan Menon (2004) 3.
KLT 326, the High Court held as under:
"Once landlord could establish the tenant has ceased to
E occupy the premises continuously for six months prior to
the filing of the petition he is entitled to get order of eviction
under that section. The word "occupation" must be
understood to be not mere physical possession. Tenant
should use the building. The word "occupy" means to
F cohabit with, to hold or have in possession. Tenanted
premises must be in the state of being enjoyed and
occupied. The word "occupy" used by the statute would
show that tenanted premises be put to use. Tenant cannot
be heard to contend that he is having physical possession
of the premises though not in occupation. So far as this
G
case is concerned, we are of the view landlord has
discharged the burden and then the onus has shifted to the
tenant and the tenant could not establish that he has not
ceased to occupy the premises and even if there is
cessation that was with reasonable cause."
H
DUNLOP INDIA LIMITED v. A.P.. RAHNAAND ANR. 1117
' [G.S. SINGHVI, J.]
26. In Paµlina Joseph v. ldukki District Wholesale Co- A
operative Consumer Stores Ltd. (supra), the Division Bench
of the High Court referred to the dictionary meaning of the word
"reasonable" and observed:
'The question whether the tenant ceases to o"ccupy the 8
building continuously for six months is primarily a question
of fact to be determined with reference to the facts
available in each case. The scope of "occupation of the
building" depends on the purpose for which the building
is let and the purpose for which it is used. The nature of C
the business and the requirement of the physical presence
or otherwise of the tenant in the building for the conduct of
the business is a relevant fact. No straight jacket formula
can be evolved in the matter of proof of cessation of
occupation within the meaning of Section 11 (4)(v) of the
Act. This intention of the tenant, though not conclusive as D
such has also relevance in determining whether there was
actual cessation of occupation within the meaning of
Section 11 (4)(v). When it is proved by the landlord that the
tenant ceased to occupy the building continuously for six
months, the burden of proving that there was reasonable E
cause for such cessation is on the tenant. Reasonable
cause is also a question of fact to be decided in the light
of the facts proved in the case. No rigid formula can be
evolved for proof of "reasonable cause". The facts and
circumstances of the case, the particular facts with F
reference to the business activities of the tenant, the nature
of the business, the magnitude of the business, the
circumstance which led to the cessation of occupation are
all relevant in considering whether there was reasonable
cause. If the cessation of occupation was due to G
circumstances beyond the control of the tenant, certainly
the Courts would be inclined to accept the case of the
tenant that,cessation of occupation was not without
reasonable cause. Financial constraint of the tenant by
itself may not be a sufficient reason to hold that there was H
1118 SUPREME COURT REPORTS (2011] 5 S.C.R.
A . reasonable cause. But that is not completely irrelevant in
considering the question. Whether the tenant is an
individual or an organization controlled by the Government
or a Co-operative society may also be relevant in
considering the question of reasonable cause. If there is
B a plausible explanation to the question why the business
was not run in the premises continuously, it may well be a
relevant fact in considering whether there was reasonable
cause for cessation of occupation under Section 11 (4){v),
depending on the facts and circumstances of each case.
c In the given set of facts and circumstances, if it can be
concluded that an ordinary prudent man would act in the
manner in which the tenant did, it can be safely said that
the cessation of occupation was with reasonable cause."
(emphasis supplied)
D
27. In Simon & Ors. v. Rappai (2008) 2 KLJ 488, the High
Court interpreted Section 11 (4){v) and held:
"As far as the ground available under Section 11(4){v) is
concerned, it is well settled by various decisions of this
E
Court that if the landlord has discharged the initial burden
it is upto the tenant to lead evidence in the matter to show
that he has been conducting business in the premises. A
learned Single Judge of this Court in the decision report
in Abbas v. Sankaran Namboodiri (1993 (1) KLT 76) while
F examining the question held that, the word 'occupation' is
used to denote the tenant's actual physical use of the
building either by himself or through his agents or
employees and legal possession is not sufficient. It was
held that, "however, if a landlord succeeds in proving that
G his tenant did not occupy the building almost near the
period fixed in Section 11 (4)(v) of the Act it may help the
court to presume that there could have been cessation of
occupation for the statutory period. Such background
presumption is not anathematic to the law of evidence". In
H para.7 it was observed that, "be that as it may, burden is
DUNLOP INDIA LIMITED v. A.P. RAHNAAND ANR. 1119
[G.S. SINGHVI, J.]
.on the landlord to prove that the tenant ceased to occupy A
the building for six months. But it is hard to expect a
landlord to prove the precise during which his tenant
, ceased to occupy the building. However, if the cour:t is
satisfied on the· evidence and/or with the aid of
presumptions that the tenant did not occupy the building B
for such length of time as would cover the statutory period,
then the burden would shift to the tenant to show that he
had reasonable cause for such non-occupation." Finally it
<was also observed in para.9 that, 'but, possession must
combine with something more to make it occupation. c
Legal possession does not by itself constitute occupation'.
These principles can be safely applied to the facts of this
·case."
28. In this case, the Rent Control Court, after detailed
scrutiny of the pleadings and the evidence of the parties D
recorded a finding that while the landowners (respondents
herein) succeeded in proving that the tenant (appellant herein)
had ceased to occupy the suit premises for a period exceeding
six months, the latter could not prove that it was occupying the
premises or that non occupation thereof was for a reasonable E
cause. The Rent Control Court took cognizance of the
appellant's plea that it was carrying on business activities from
the suit premises with reduced staff strength but discarded the
same by observing that the relevant records like the attendance
register, muster roll, wage register had not been produced and F
no evidence was adduced to prove payment of electricity bills
and sale and purchase of goods. The High Court also analysed ·
the pleadings and evidence of the parties and concurred with
the findings recorded by the Rent Control Court. As againstthis,
the appellant did not produce any evidence to prove physical G
occupation of the premises or any business transaction. It also
failed to produce any evidence to show that there was
reasonable cause for non occupation of the suit premises.
29. The arguments of Shri Nariman that the second set of H
1120 SUPREME COURT REPORTS [2011] 5 S.C.R.
A rent control petitions should have been dismissed as barred
by res judicata because the issue raised therein was directly
and substantially similar to the one raised in the first set of rent
control petitions does not merit acceptance for the simple
reason that while in the first set of petitions, the respondents
B had sought eviction on the ground that the appellant had ceased
to occupy the premises from June, 1998. In the second set of
petitions, the period of non occupation commenced from
September, 2001 and continued till the filing of the eviction
petitions. That apart, the evidence produced in the first set of
c petitions was not found acceptable by the Appellate Authority
because till 2.8.1999, the premises were found kept open and
alive for operation. The Appellate Authority also found that in
spite of extreme financial crisis, the management had kept the
business premises open for operation till 1999. In the second
round, the appellant did not adduce any evidence worth the
0
name to show that the premises were kept open or used from
September, 2001 onwards. The Rent Controller took
cognizance of the notice fixed on the front shutter of the building
by A.K. Agarwal on 1.10.2001 that the company is a sick
industrial company under the 1985 Act and operation has been
E suspended with effect from 1.10.2001; that no activity had been
done in the premises with effect from 1.10.2001 and no
evidence was produced to show attendance of the staff,
payment of salary to the employees, payment of electricity bills
from September, 2001 or that any commercial transaction was
F done from the suit premises. It is, thus, evident that even though
the ground of eviction in the two sets of petitions was similar,
the same were based on different causes. Therefore, the
evidence produced by the parties in the second round was
rightly treated as sufficient by the Rent Control Court and the
G Appellate Authority for recording a finding that the appellant had
ceased to occupy the suit premises continuously for six months
without any reasonable cause.
30. The question whether the prohibition contained in
H Section 22(1) of the 1985 Act operates as a bar to the
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1121
[G.S. SINGHVI, J.]
maintainability of a petition filed for eviction of the tenant was A
considered and answered in negative in Shree Chamundi
Mopeds Ltd. v. Church of South India Trust Association
(1992) 3 SCC 1. In that case, this Court referred to the
provisions of the Karnataka Rent Control Act, Section 22(1) of
the 1985 Act and observed: B
"11. Similarly in Civil Appeal No. 2553 of 1991 this
question has been raised by the appellant-company to
challenge the order of the learned Single Judge of the
Karnataka High Court dated March 15, 1991 dismissing C
the revision petition under Section 50(1) of Karnataka Rent
Control Act. For the reasons aforementioned Section 22(1)
of the Act cannot be invoked to assail the said order of
the High Court on the ground that on the date of passing
of the order of the High Court the matter was pending
before the Appellate Authority. But in this appeal, the order D
allowing the eviction petition was passed by the Xll
Additional Small Causes Court on September 30, 1989
and at that time the matter under Sections 15 and 16 was
pending before the Board. It is, therefore, necessary to
consider the second question about the applicability of E
Section 22(1) to eviction proceedings instituted by the
landlord against the tenant who happens to be a sick
company. In this regard, it may be mentioned that the
following proceedings only are automatically suspended
under Section 22(1) of the Act: F
(1) proceedings for winding up of the industrial
company;
(2) proceedings for execution, distress or the like
against the properties of the sick industrial G
company; and
(3) · proceedings for the appointment of receiver.
12. Eviction proceedings initiated by a landlord against a H
1122 SUPREME COURT REPORTS [2011] 5 S.C.R.
A tenant company would not fall in categories (1) and (3)
referred to above. The question is whether they fall in
category (2). It has been urged by the learned counsel for
the appellant-company that such proceedings fall in
category (2) since they are proceedings against the
B property of the sick industrial company. The submission
is that the leasehold right of the appellant-company in
the premises leased out to it is property and since the
eviction proceedings would result in the appel/ant-
company being deprived of the said property, the said
c proceedings would be covered by category (2). We are
unable to agree. The second category contemplates
proceedings for execution, distress or the like against any
other properties of the industrial company. The words 'or
the like' have to be construed with reference to the
preceding words, namely, 'for execution, distress' which
D
means that the proceedings which are contemplated in
this category are proceedings whereby recovery of dues
is sought to be made by way of execution, distress or
similar proceedings against the property of the company.
Proceedings for eviction instituted by a landlord against
E a tenant who happens to be a sick industrial company,
cannot, in our opinion, be regarded as falling in this
category. We may, in this context, point out that, as
indicated in the Preamble, the Act has been enacted to
make special provisions with a view to securing the timely
F detection of sick and potentially sick companies owning
industrial undertakings, the speedy determination by a
Board of experts of the preventive, ameliorative, remedial
and other measures which need to be taken with respect
to such companies and the expeditious enforcement of
G the measures so determined. The provision regarding
suspension of legal proceedings contained in Section
22(1) seeks to advance the object of the Act by ensuring
that a proceeding having an effect on the working or the
finances of a sick industrial company shall not be instituted
H or continued during the period the matter is under
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1123
. [G.S. SINGHVI, J.]
consideration before the Board or the Appellate Authority A
or a sanctioned scheme is under implementation without
the consent of the Board or the Appellate Authority. It could
not be the intention of Parliament in enacting the said
provision to aggravate the financia) difficulties of a sick
industrial company while the said matters were pending B
before the Board or the Appellate Authority by enabling
a sick industrial company to continue to incur further
liabilities during this period. This would be the
consequence if sub-section (1) of Section 22 is construed
to bring about suspension of proceedings for eviction c
instituted by landlord against a sick industrial company
which has ceased to enjoy the protection of the relevant
rent law on account of default in payment of rent. It would
. also mean that the landlord of such a company must
continue to suffer a loss by permitting the tenant (sick D
industrial company) to occupy the premises even though
it is not in a position to pay the rent. Such an intention
cannot be imputed to Parliament. We are, therefore, of
the view that Section 22(1) does not cover a proceeding
instituted by a landlord of a sick industrial company for E
the eviction of the company premises let out to it."
(emphasis supplied)
31. In Gujarat Steel Tube Co. Ltd. v. Virchandbhai B.
Shah (1999) 8 sec 11, it was argued on behalf of the appellant
F
that suit for recovery of rent etc. is not maintainable in view of
the prohibition contained in Section 22(1). While affirming the
judgment of the High Court, the Court referred to the earlier
judgment in Shree Chamundi Mopeds Ltd. v. Church of South
India Trust Association (supra) and held:
G
"Section 22 no doubt, inter alia; states that notwithstanding
any other law no suit for recovery of money shall lie or be
proceeded with except with the consent of the Board, but
as we look at it the filing of an eviction petition on the
ground of non-payment of rent cannot be regarded as filing H
1124 SUPREME COURT REPORTS [2011] 5 S.C.R.
A of a suit for recovery of money. If a tenant does not pay
the rent, then the protection which is given by the Rent
Control Act against his eviction is taken away and with
the non-payment of rent order of eviction may be passed.
It may be possible that in view of the provisions of Section
s 22, the trial court may not be in a position to pass a
decree for the payment of rent but when an application
under Section 11(4) is filed, the trial court in effect gives
an opportunity to the tenant to pay the rent failing which
the consequences provided for in the sub-section would
c follow. An application under Section 11 (4), or under any
other similar provision, cannot, in our opinion, be
regarded as being akin to a suit for recovery of money."
(emphasis supplied)
D The same view was reiterated in Carona Ltd. v. Parvathy
Swaminathan and Sons (2007) 8 SCC 559.
32. We shall now examine whether pendency of the
proceedings under the 1985 Act, which implies that the
E appellant was facing financial difficulty in conducting its
business constituted reasonable cause for cessation of
occupation of the premises. The appellant was declared a sick
industrial company on 22.6.1998 and IDBI was appointed as
the Operating Agency under Section 17(3) of the 1985 Act to
examine the viability of the company. Subsequently, State Bank
F of India was appointed as the Operating Agency. After several
hearings, the BIFR passed order dated 19.10.2001 and
directed the appellant to sort out all pending issues with secured
creditors, Central/State Governments, TllC, KSllDC and TNSEP
and submit a revised comprehensive and fully tied up
G rehabilitation scheme to the Operating Agency. For the next
about five years. no tangible step is shown to have taken by
the appellant for revival of its business activities. In August and
November, 2006, the appellant filed applications before the
BIFR seeking its permission for issue of two crore equity
H shares of Rs. 10/- each fully paid up at par to the company's
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1125
[G.S. SINGHVI, J.]
promoters and/or its associates on private placement basis A
against full consideration to be. utilized for. rehabilitation.
Thereupon, the BIFR passed order· dated 16.3;2007. Three
appeals were filed against that order: The AAIFR dismissed ·
the appeals after taking note of order passed by the Madras
High Court in Writ Petition (C) No. 24422 of 2006, order dated· B
25.4.2007 passed by the Orissa High Court in W.P '(C) No. 344
of 2008, order dated 5.2.2008 passed by this Court in SLP(C)
CC Nos. 1943-1944 of 2008 and held that in view of the
various orders, the net worth of the appellant having turned
positive and it C-an no longer be treated as sick industrial c
company.
Before the Rent Control Court, the appellant had neither
pleaded nor any evidence was produced to show that due to
financial stringency was due to the reasons beyond its control
and on that account, the suit premises could not be used from D
September, 2001 onwards for the purpose specified in the
lease deeds. Therefore, the so called financial stringency
cannot be construed as reasonable cause within the meaning
of Section 11 (4)(v).
E
33. We are also of the view that order dated 3.3.2008
passed by the AAIFR has no bearing on the decision of the
issues raised by the respondents in the context of Section
11(4)(v) of the 1965 Act because what was required to be
considered by the Rent Control Court was whether as on the F
date of filing the petition the appellant had ceased to occupy
the premises continuously for a period of six months without
reasonable cause. The improvement in the financial health of
the appellant after many years cannot impinge upon the
concurrent finding recorded by the Rent Control Court and the
Appellate Authority that the respondents had succeeded in G
making out a case for eviction under Section 11 (4)(v) and that
there was no reasonable cause for the appellant to have
~ceased to occupy the suit premises continuously for a period
•Of six months.
H
1126 SUPREME COURT REPORTS [2011) 5 S.C.R.
A 34. In the result, the appeals are dismissed. The parties
are, however, left to bear their own costs. The appellant is
allowed three months time to deliver vacant possession of the
suit premises to the respondents subject to its filing usual
undertaking before this Court within four weeks. It is also made
B clear that during this period of three months, the appellant shall
not induct any other person in the premises or transfer its
possession to any other person in any capacity whatsoever.
D.G. Appeals dismissed.
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "eviction"Sign in to search