Holding

Tenancy of non‑residential premises is heritable and acquisition of a premises by a partnership firm of which the tenant is a partner does not trigger eviction under Section 21(1)(p).

Summary

The landlord sought eviction of the deceased tenant Gantusa H. Badri's premises under Sections 21(1)(a), (h) and (p) of the Karnataka Rent Control Act, 1961, alleging arrears and that the tenant had acquired an alternative suitable building through a partnership firm. The Munsiff dismissed the eviction, but the revisional court allowed eviction on the ground that the partnership firm had acquired a vacant premises, a view upheld by the Karnataka High Court, which also held that tenancy of non‑residential premises is not heritable. On appeal, the Supreme Court examined the definition of "tenant" in Section 3(r) and the heritability of commercial tenancies, relying on the Constitution Bench decision in Gian Devi Anand and the earlier Gadskari judgment. The Court held that tenancy in non‑residential premises is heritable and that acquisition of a premises by a partnership firm, even if the tenant is a partner, does not attract eviction under Section 21(1)(p). Consequently, the eviction order was set aside and the appeal allowed.

Issues considered

Whether tenancy in respect of non‑residential premises under the Karnataka Rent Control Act, 1961 is heritable.
Whether a tenant who becomes a partner in a partnership firm that acquires vacant possession of a suitable building incurs liability for eviction under Section 21(1)(p) of the Act.

Legislation cited

Karnataka Rent Control Act, 1961s. 21(1)(a), s. 21(1)(h), s. 21(1)(p), s. 3(r), s. 50, s. 51

Subjects

rent controltenancy heritabilitynon‑residential premisesevictionKarnataka Rent Control ActSection 21(1)(p)legal heirspartnership firm

Judgment

GANTUSA H. BADDI (DEAD) BY LRS. A
v.
MEERABAI G. PAI AND ORS.

APRIL 24, 2000

[G.B. PATIANAIK, R.P. SETHI AND SHIVARAJ V. PATIL, JJ.] B

Rent Control and Eviction:

Karnataka Rent Control Act, 1961:

S. 3( r)-Tenancy-Non-residential premises-Death oforiginal tenant-
c
Whether tenancy heritable-Held, yes.

S. 21 ( 1)(P )-Tenancy-Non-residential premises-Eviction-Liability-
Acquisition of a vacant premises by partnership firm of which tenant is a
partner-Effect of-Held, acquisition of a vacant premises by the partnership D
firm would not amount to acquisition of the same by tenant-Thus, tenant not
liable to be evicted.

Wo,m and Phrases:

'Tenant'-Meaning and scope in the context of S. 3( r) of Kamat aka Rent E
Control Act, 1961.

Respondent-landlord unsuccessfully filed an application for eviction
of appellant-tenant under S. 21(1)(a), (h) and (p) of the Karnataka Rent
Act, 1961 before Munsif. However, Revisional Court allowed the eviction F
under s. 21(l)(p) of the Act holding that the partnership firm of which
tenant was a partner had acquired a non-residential premises. During the
pendency of revision before the High Court, original te~ant died and his

- legal heirs were brought on record. High Court relying upon the judgment
of this Court in Venkatesh Thimmaiah 's case held that the tenancy in respect
of non-residential premises was not heritable under the Act. High Court G
also upheld the eviction under s; 2l(l)(p) of the Act. Hence the present
appeal.

On behalf of appellant-tenant it was contended that in view of the
decisions of this Court in Vishnu Narayan Gadskari's case and Gian Devi H
275
'
~.

276 SUPREME COURT REPORTS [2000] 3 S.C.R.
A Anand's case, the direction of this Court in Venkatesh Thimmaiah's case
must be held to have been not correctly decided; that the acquisition of a
premises by the partnership firm of which the tenant was merely a partner
to the extent of 15 per cent, cannot be held to be an acquisition of alternative
premises by the tenant in view of the definition of ''tenant" in Section 3(r) of
the Act.
B
Allowing the appeal, the Court

Held: 1.1. Tenancy in respect of a non-residential premises under the
Karnataka Rent Control Act, 1961 is lt~itabfe. [283-E]
c 1.2. Under S. 3(r) of the Act~ 'te~ant' has been defined interalia to
mean any person by whom or on whose account rent is payable for a
premises and includes the surviving spouse or any son or daughter or
father or mother of a deceased tenant who had been living with the tenant
in the premises as a member of the tenant's family up to the death of the
D tenant. Thus, in the absence of any contrary provisions ill' the Act, High
Court was not justified in holding that tenancy of a non-residential premises
cannot be inherited. [279-G; 283-E]

Gian Devi Anand v. Jeevan Kumar and Ors., [1985] 2 SCC 683,
followed.
E
Vishnu Narayan Gadskari (Dead) by LRs. v. Paralal Baladev Uza and
Ors., [1995) Supp. 4 SCC 428, relied on.

Venkatesh Thimmaiah Gurjalkar v. S.S. Hmyaldar, JT (1997) 8 SC 528,
p overruled.

2.1. High Court was not justified in holding that tenant incurred the
liability of eviction under S. 21(l)(p) of the Act, on acquisition of a vacant
premises by the partnership·firm. [284-E]

G 2.2. The language of S.21(1)(p) of the Act is clear and unambiguous
and given its plain grammatical meal_ting, it is susceptible of only one
construction that it is only when the tenant has built or acquired vacant
possession of or has been allotted a suitable building, then only the said
provisions of the Act are attracted and not otherwise. The expression
''tenant" has been defined in Section 3(r) and howsoever vide meaning to
H
G.H. BADDI v. M.G. PAI [PATIANAIK, J.] 277
the said definition be given, it will not bring within its scope, a partnership A
firm of which the tenant himself may be a partner. [283-G-H; 284-A]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1510of1999.

From the Judgment and Order dated 16.11.98 of the Kamataka High
Court in H.R.R.P. No. 532 of 1994. B

G.L. Sanghi, (R.S. Hegde) for P.P. Singh for the Appellants.

S.N. Bhat and D.P. Chaturvedi for the Respondents.

The Judgment of the Court was delivered by c
PATTANAIK, J. This appeal is directed against the revisional Order of
a learned Single Judge of Kamataka High Court, dismissing the Revision
Petition and affinning the order of eviction passed by the District Judge in his
Revisional Jurisdiction under the provisions of Kamataka Rent Control Act.
D
The legal representatives of the deceased tenant are the appellants. The
landlord filed an application for eviction under Section 21(1) (a), (h) and (p)
of the Act, alleging that the tenant has not paid or tendered the arrears of the
rent legally recov6fable from him and that the premises are reasonably and
bona fide required by the landlord for occupation of himself as well as on the
further assertion that the tenant has acquired vacant possession of an alterna- E
tive suitable building. The Munsif at Yellapur, on consideration of the entire
materials before him held against the landlord on all counts, and dismissed the
application for eviction by his order dated 4.10.1991. The said order was
assailed in revision under Section 50 of the Act. The Revisional Court came
to the conclusion that the Munsiff had not properly appreciated the evidence F
on record. Though he did not set aside the findings of the Munsiff, on the
question of arrears of rent and the bona fide requirement, which are the two
grounds under Section 21(l)(a) and (h) of the Act, but he did set aside the
finding on the third question namely whether tenant has acquired a suitable
alternative premise, as required under Section 2l(l)(p) of the Act and came
to hold that the eviction sought for on the grounds available under Section G
2l(l)(p) of the Act has to be allowed. Against the said revisional order of the
District Judge in exercise of powers under Section 50 of the Act, the tenants
moved the High Court. The landlord also filed a revision petition against the
findings of the revisional Court on the question of arrears of rent and bona
fide requirements. The original tenant died during the pendency of the said . H
278 SUPREME COURT REPORTS [2000] 3 S.C.R.
A · revision petition and his legal heirs were substituted and brought on record.
The High Court disposed of the revision on two grounds. Following the
Judgment of this Court in the case of Venkatesh Thimmaiah Gurjalkar v. S.S.
Hawaldar, IT (1997) 8 SC 528, the High Court came to the conclusion that
the premises in question being non- residential and under the Act the tenancy
B in respect of non-residential premise being not heritable and admittedly the
tenant having died, the revisional application is liable to be dismissed. On the
question whether the provisions of Section 21(l)(p) of the Act is attracted or
not, the High Court came to the conclusion that in view of the evidence of the
son of the original tenant that it was the partnership firm, which was running
the business in the schedule premises and the said firm has acquired an
c alternative premise, it must be held that the grounds for eviction under Section
2l(l)(p) has been made out. With these findings, the revision filed by the
tenant as well as the one filed by the landlord stood dismissed. On grant of
special leave by this Court, this appeal was placed before a Bench of two
learned Judges, wherein a contention was advanced that the decision of this
D Court in Venkatesh Thimmaiah's case, on which the High Court has relied
upon, is contrary to the decision of this Court in the case of Vishnu Narayan
Gadskari (Dead) by LRs. v. Paralal Baladev Uza and Ors., [1995] Supp. 4
sec 428, and in both the cases, the question for consideration was whether
under the Karnataka Rent Control Act, the tenancy in respect of a non-
E residential premises can be held to be heritable or not. In view of the two
conflicting decisions, referred to above, the Bench, thought it fit to refer the
matter to a larger Bench and that is how the matter has been placed before us.

The learned counsel for the appellant contends that the latter decision
of this Court in Venkatesh Thimmaiah's case, must be held to have been not
F correctly decided, as it does not take notice of the earlier decision in Vishnu
Narayan's case [1995] Supp. 4 SCC 428, which was a decision interpreting
the very same provision of the Kamataka Rent Control Act and which also
relied upon the Constitution Bench decision of this Court in Gian Devi
Anand's case [1985] 2 SCC 683, wherein the pari materia provision of Delhi
G Rent Control Act, 1958 was under consideration. The learned counsel further
urged that acquisition .of a premises by the partnership firm of which the tenant
was merely a partner to the extent of 15 per cent, cannot be held to be an
acquisition of alternative premises by the tenant in view of the definition of
"tenant" in Section 3(r) of the Act and the High Court, therefore committed
H serious error of law.
G.H. BADDI v. M.G. PAI [PATTANAIK, J.] 279
The learned counsel appearing for the respondent however contended A
that the impugned judgment of the High Court is unassailable, since it has
followed the latter decision of this Court on the question of heritability of a
non-residential premises and it has rightly interpreted the provisions of Section
2l(l)(p) of the Act. According to the learned counsel for the respondent, the
so-called partnership firm being of the father and the sons and the said firm
B
having acquired the premises where business is being carried on and even in
the schedule premises the firm in fact was carrying on the business, though
~ -4 the father was the tenant, the conclusion becomes irresistible that an alternative
premises is now available and therefore, eviction could be ordered under
Section 21(1)(p) of the Act.
c
In view of the rival submissions at the Bar, two question arise for our
consideration:

(1) Whether the tenancy in respect of a non- residential purpose can
be held to be heritable under the Karnataka Rent Control Act;
and D
(2) Whether an individual being a tenant of a business premises and
said individual having become a partner of a firm, if the firm
acquires vacant possession of a suitable building, whether the
tenant incurs the liability of being evicted under Section 21(p)
of the Act. E

So far as the first question is concerned, it really depends upon an
analysis of the provisions of the Act. The expression "premises" has been
defined in Section 3(n) to mean a building as defmed in clause (a) and any
land not used for agricultural purposes. The "building" has been defmed under
F
Section 3(a) to mean any building or hut or part of a building or hut other than
a farm house, let or to be let separately for residential or non-resiential
purposes and includes . The expression "tenant" has been defmed in
Section 3(r) to mean any person by whom or on whose account rent is payable
for a premises and includes the surviving spouse or any son or daughter or
father or mother of a deceased tenant who had been living with the tenant in G
the premises as a member of the tenant's family up to the death of the tenant
and a person continuing in possession after the termination of the tenancy in
his favour, but does not include a person placed in occupation of a premises
by its tenant or a person to whom the collection of rents or fees in a public
market, cart-stand or slaughter house or of rents for shops has been framed H
280 SUPREME COURT REPORTS [2000) 3 S.C.R.
A out or leases by a local authority. Section 51 of the Act provides that any A.
application made, appeal preferred or proceeding taken under the Act by or
against any person may in the event of his death be continued by or against
his legal representatives. In the case of Gian Devi Anand v. Jeevan Kumar and
Ors., [1985] 2 SCC 683, the Constitution Bench of this Court was considering
the very question as to whether the tenancy in respect of a commercial
B
premises or non-residential premises can be said to be heritable under the Act.
Bhagwati J, concurring with the majority view, expressed by Sen J, came to
hold that the distinction between contractual tenancy and statutory tenancy is ~-
completely obliterated by the rent control legislation and if a contractual tenant
has an estate or interest in the premises which is heritable, a statutory tenant
c should also be held to have such heritable estate or interest. In one case, the
estate or interest is the result of contract while in the other, it is the result of
statute. But the quality of the estate or interest is the same in both cases. In
the majority judgment expressed through Sen, J, it was observed:

"Keeping in view the main object of Rent Control Legislation, the
D
position of a tenant whose contractual tenancy has been determined
has to be understood in the light of the provisions of the Rent Acts.
Though provisions of all the Rent Control Acts are not uniform, the
common feature of all the Rent Control Legislation is that a contrac-
tual tenant on the termination of the contractual tenancy is by virtue .A
E >
of the provisions of the Rent Acts not liable to be evicted as a matter
of course under the ordinary law of the land and he is entitled to
remain in possession even after determination of the contractual
tenancy and no order or decree for eviction will be passed against a
tenant unless any ground which entitles the landlord to get an order
F or decree for possession specified in the Act is established. In other
words, the common feature of every Rent Control Act is that it affords
protection to every tenant against eviction despite termination of
tenancy except on grounds recognised by the Act and no order or
decree for eviction shall be passed against the tenant unless any such
ground is established to the satisfaction of the court."
G
After considering the definitions of 'tenant', the 'landlord' and various
..,,.
other provisions cf the Delhi Act as well as the amendment to the definition
of "tenant" introduced by the Delhi Rent Control Act Amendment ~ct (Act
18 of 1976), which gives personal protection and personal right of continuing
H in possession to the heirs of the deceased statutory tenant in respect of
G.H. BADDI v. M.G. PAI [PATIANAIK, J.] 281
residential premises only and not with regard to the heirs of the so-called A
'statutory tenant' in respect of commercial premises, the Court observed that
the termination of the contractual tenancy in view of the definition of te~ant
in the Act does not bring about any change in the status and legal position of
the tenant, unless there are contrary provisions in the Act. The Court observed
in paragraph 34 of the Judgment : B
"A tenant of any commercial premises has necessarily to use the
premises for business purposes. Business carried on by a tenant of any
commercial premises may be and often is, his only occupation and
the source of livelihood of the tenant and his family. Out of the
income earned by the tenant from his business in the commercial C
premises, the tenant maintains himself and his family; and the tenant,
.if he is residing in a tenanted house, may also be paying his rent out
of the said income. Even if a tenant is evicted from his residential
premises, he may with the earnings out of the business be in a position
to arrange for some other accommodation for his residence with his
family. When, however, a tenant is thrown out of the commercial
D
premises, his business which enables him to maintain himself and his
family comes to a standstill. It is common knowledge that it is much
more difficult to find suitable business premises than to find suitable
premises for residence. It is no secret that for securing commercial
accommodation, large sums of money by way of salami, even though E
not legally payable, may have to be paid and rents of commercial
premises are usually very high. Besides, a business which has been
carried on for years at a particular place has its own goodwill and
other distinct advantages. The death of the person who happens to be
the tenant of the commercial premises and who was running the F
business out of the income of which the family used to be maintained,
is itself a great loss to the members of the family to whom the death,
naturally, comes as a great blow. Usually, on the death of the person
who runs the business and maintains his family out of the income of
the business, the other members of the family who suffer the
bereavement have necessarily to carry on the business for the G
maintenance and support of the family. A running business is indeed
a very valuable asset and often a great source of comfort to the family
as the business keeps the family going. So long as the contractual
tenancy of a tenant who carries on the business continues, there can
be no question of the heirs of the deceased tenant not only inheriting H
282 SUPREME COURT REPORTS [2000) 3 S.C.R.
A the tenancy but also inheriting the business and they are entitled to
run and enjoy the same. We have earlier held that mere termination
of the contractual tenancy does not bring about any change in the
status of the tenant and the tenant by virtue of the definition of the
'tenant' in the Act and the other Rent Acts continues to enjoy the
s~e·status and position, unless there be any provisions in the Rent
B
Acts which indicate to the contrary. The mere fact that in the Act no
provision has been made with regard to the heirs of tenants in respect
of commercial tenancies on the death of the tenant after termination
of the tenancy, as has been done in the case of heirs of the tenants
of residential premises, does not indicate that the Legislature intended
c that the heirs of the tenants of commercial premises will cease to
enjoy the protection afforded to the tenant under the Act. The
Legislature could never have possibly intended that with the death of
a tenant of the commercial premises, the business carried on by the
tenant, however flourishing it may be and even if the same constituted
D the source of livelihood of the members of the family, must neces-
sarily come to an end on the death of the tenant, only because the
tenant died after the contractual tenancy had been terminated. It could
never have been the intention of the Legislature that the entire family
of a tenant depending upon the business carried on by the tenant will
be completely stranded and the business carried on for years in the
E premises which had been let out to the tenant must stop functioning
at the premises which the heirs of the deceased.tenant must necessar-
ily vacate, as' they are afforded no protection under the Act. We are
of the opinion that in case of commercial premises governed by the
Delhi Act, the Legislature has not thought it fit in the light of the
F situation at Delhi to place any kind of restriction on the ordinary law
of inheritance with regard to succession. It may also be borne in mind
that in case of commercial premises the heirs of the deceased tenant
not only succeed to the tenancy rights in the premises but they
succeed to the business as a whole."
G It has been further held:

"It may be noticed that in some Rent Acts, provisions regulating
heritability of commercial premises, have also been made whereas in
some Rent acts, no such provision either in respect of residential
H tenancies or commercial tenancies has been made. As in the present
G.H. BADDI v. M.G. PAI [PATTANAIK, J.] 283
Act, there is no provision regulating the rights of the heirs to inherit A
the tenancy rights of the tenant in respect of the tenanted premises
which is commercial premises, the tenancy right which is heritable
devolves on the heirs under the ordinary law of succession."

The provisions of the Kamataka Rent Control Act directly came up for
consideration before a Bench of this Court in the case of Vishnu Narayan B
Gadskari (Dead) by LRs. v. Para/al Baladev Uza and Ors., (1995] Supp 4
SCC 428, relying upon the aforesaid Constitution Bench decision and bearing
in mind the definition of 'tenant' in Section 3(r) of the Karnataka Act, the
Court held that the tenant continues to have an estate or interest in the tenanted
premises and the tenancy rights both in respect of residential premises and c
commercial premises are heritable. In the latter decision in Venkatesh
Thimmaiah 's casp, neither the decision of the Constitution Bench, referred to
supra has been noticed nor the earlier two Judge Bench decision of this Court
on the provisions of Kamataka Act has been noticed and relying upon the
decision of the Karnataka High Court, without any analysis of the provisions
of the Act, the conclusion of the Forums below that the premises in question D
being non- residential, the right of tenancy therein is not heritable has been
upheld. In view of the law laid down by the Constitution Bench as well as the
earlier decision of this Court in Vishnu Narayan Gadskari's case, we have no
hesitation to hold that the latter decision in Venkatesh Thimmaiah's case, has
not been correctly decided. In the absence of any contrary provisions in the E
Act, it must be held that the tenancy in respect of a non-residential premises

- under the Kamataka Rent Control Act is heritable. The conclusion of the High
Court to the contrary, therefore, cannot be sustained.

So far: as the second question is concerned, it depends upon the
interpretation of Section 2l(l)(p) of the Act. The aforesaid provision is quoted F
hereinbelow in extenso:

"Sec.21( l)(p): that the tenant whether before or after the coming into
operation of this prut has built, or acquired vacant possession of, or
been allotted, a suitable building."
G
The language of the provision is clear and unambiguous and given it"s
plain grammatical meaning, it is susceptible of only one construction that it
is only when the tenant has built or acquired vacant possession of or has been
allotted a suitable building, then only the provisions of Section 21(1)(p) of the
Act are attracted and not otherwise. The expression "tenant" has been defined H
284 SUPREME COURT REPORTS [2000] 3 S.C.R.
A in Section 3(r) and howsoever vide meaning to the said definition be given,
it will not bring within its scope, a partnership firm of which _the tenant himself
may be a partner. In the case in hand the individual namely deceased Gantusa
H. Baddi was the tenant in respect of the premises and application for eviction
had been filed as against him. The so-called alternative accommodation, has .
been acquired, admittedly by a partnersl,llp 'firm, no doubt, consisting of the
B
original tenant the father and his sons wherein the father has 15 per cent share
but it cannot be held that the said acquisition of vacant possession is by the
tenant. The High Court has given a peculiar reasoning on consideration of
evidence adduced to the effect that since in the disputed premises, the business
I
of the firm was carried on, though it had been tenanted to an individual, the
c moment a vacant possession has been acquired by the finn, the liabilities
incurred under Section 2l(p) of the Act, we are unable to pursuade ourselves
to agree with the aforesaid conclusion of the High Court. In our considered .
opinion, because of acquiring vacant possession of a building by the partner-
ship firm of which the tenant may be a partner, the tenant does not become
liable to be evicted by application of Section 2J(l)(p) of the Act. It is neither
D
the case of the landlord in the application for eviction that the tenant namely
deceased Gantusa H. Baddi, has acquired vacant possession of a building nor
has it been proved in course of the proceeding. That being the position, the
conclusion of the High Court that the tenant has incurred the liability of having
evicted under Section 21(1)(p) of the Act, the moment a business premises is
E acquired.by the partnership firm is erroneous and cannot be sustained.

In view of our aforesaid conclusion on both the questions, this appeal
succeeds. The order of eviction passed by the Revisional Authority and
reaffirmed by the High Court stands quashed. The application for eviction
stands dismissed. There will however be no order as to costs.
F
S.V.K. Appeal allowed.