Supreme Court of India
M/S. COMMERCIAL AUTO SALES (P) LTD .versusM/S. AUTO SALES (PROPERTIES)
- Citation
- 2009 INSC 1119
- Decided
- 9 September 2009
- Disposal
- Case Partly allowed
- Bench
- TARUN CHATTERJEE
Holding
The High Court erred in not determining the true intention of the parties under the family settlement; the question of a landlord‑tenant relationship must be re‑examined.
Summary
The respondent filed an eviction suit against the appellant for non‑payment of rent on premises at 18 Kanpur Road, alleging a landlord‑tenant relationship. The appellant contended that the premises were occupied under a family settlement dated 23 August 1993, which allotted the property to the respondent’s husband and permitted the appellant to use it for business in exchange for a monthly compensation of Rs 10,000, designated as rent with a 10% increase every three years. The Small Causes Court decreed eviction, and the High Court affirmed, rejecting the appellant’s claim that no tenancy existed. The Supreme Court held that the High Court erred by not examining the true intention of the parties in the family settlement and by overlooking a material clause, thus failing to determine whether a landlord‑tenant relationship arose and whether any lease would be determinable. The Court set aside the High Court’s judgment, partially allowed the appeal, and remitted the matter to the High Court for fresh consideration on the relationship question.
Issues considered
- The family settlement created a landlord‑tenant relationship (lease) between the parties.
- Whether, if a lease exists, it is determinable under the terms of the settlement.
- Whether the eviction suit is maintainable given the nature of the arrangement.
- Whether the Small Causes Court had jurisdiction to try the eviction suit.
Legislation cited
Subjects
evictionfamily settlementlandlord-tenant relationshiplease determinabilityinterpretation of contractSmall Causes Court jurisdictionrentcompensation
Judgment
[2009] 14 (ADDL.) S.C.R. 231
• MIS. COMMERCIAL AUTO SALES (P) LTD .
v.
A
.• M/S. AUTO SALES (PROPERTIES)
(Civil Appeal Nos. 6142-6143 of 2009)
SEPTEMBER 9, 2009
B
[TARUN CHATTERJEE AND R.M. LODHA, JJ.]
..I,
Deeds and documents: Family settlement - Eviction suit
- Plea of defendant that they were not tenant but occupying
the suit premises by virtue of a family settlement, rejected - c
Eviction decree - High Court affirmed the decree - On
appeal, held: High Court failed to find out the real intention
of parties in family settlement with regard to the suit premises
- Intention of parties to an instrument must be gathered from
--+ the tenns thereof in the light of surrounding circumstances - D
Matter remitted to High Court for reconsideration on the aspect.
as to whether under family settlement, relationship of landlord
and tenant came into existence.
The respondent filed a suit for eviction against the
E
appellant which was decreed. On revision, High Court
- .J._
affirmed the decree of eviction rejecting the contention
of appellant that the suit premises were not let out to him
but in family settlement, it came to the share of husband
of respondent and was given to appellant to carry on
business of a family concern and the appellant was to pay F
Rs.10,000 p.m. by way of compensation for use and
occupation of the suit premises.
In appeal to this Court, appellant contended that in
terms of the family settlement, the intention of the parties G
was not to create relationship of landlord and tenant.
Partly allowing the appeal and remitting the matter to
High Court, the Court
231 H
232 SUPREME COURT REPORTS [2009] 14 (ADDL.) S.C.R.
A HELD: The High Court proceeded on absolutely ~
erroneous premise that there is no specific denial of
relationship of landlord and tenant between the parties
in the written statement. The High Court failed to find out
what was the real ihtention of the parties in the family
B settlement with regard to retention of subject premises.
It is well settled 'that the intention of the parties to an
instrument must be gathered from the terms thereof in
the light of surrounding circumstances. The true nature
of relationship between the parties concerning the
c occupation of subject premises by the appellant was
required to be ascertained from the family arrangement
which the High Court failed to do and thereby committed
grave error in not considering the matter in right
perspective. As a matter of fact, a material clause of the
0
family settlement was overlooked altogether affecting -+--
decision in the matter. The matter needs to be
reccmsidered by the High Court on the aspects as to
whether under the family settlement a relationship of
landlord and tenant came into existence between the
parties and, if answer to the said question is in the
E affirmative, whether such lease is determinable. [Paras 10
to 13] [237-H; 238-A; 239-C-H]
Union of India v. Millenium Mumbai Broadcast (P) Ltd.
(2006) 10 sec 510, relied on.
F
Case Law Reference:
c2006) 10 sec 510 relied on Para 11
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
G 6142-6143 of 2009.
From the Judgment & Order dated 10.12.2007 of the High ~
Court of Judicature at Allahabad in Civil Revision No. 275 of
2003.
H
(
COMMERCIAL AUTO SALES (P) LTD. v. AUTO 233
SALES (PROPERTIES)
Altaf Ahmed, Meenakshi Arora, Anurag Sharma, Prashant A
Kumar (for AP & J Chambers) for the Appellant.
Jaideep Gupta, Arvind Varma, Pankaj Naqvi, Pallavi
Gupta, Siddharth Dave, T. Mahipal, Sankata Mitra, Chandni G.,
for the Respondent. B
The Judgment of the Court was delivered by
-Ai R.M. LODHA, J. 1. Leave granted.
2. These two appeals by special leave are directed
against the judgment and order dated December 1o, 2007
c
passed by the High Court of Judicature at Allahabad whereby
it dismissed revision petition of the present appellant preferred
under Section 25 of the Provincial Small Causes· Courts Act,
'-i 1887 and affirmed the judgment and decree for eviction dated
February 5, 2003.
0
3. Mis. Auto Sales (Properties) through Smt. Manju Gupta
- respondent herein filed a suit for eviction and recovery of
arrears of rent against Mis. Commercial Auto Sales (P) Ltd.,
through its Director Brij Mohan Gupta - appellant in the Court 6
of Small Causes, Allahabad with regard to portion of premises
-.>- on the ground floor of building at 18, Kanpur Road, Allahabad.
The respondent averred in the plaint that the subject premises
were under the tenancy of the appellant for rent of Rs.11,000/
- per month; that tenancy commenced from the first day of every F
English carendar month and ended on the last day of each
month; that vide notice dated March 14, 1997 the balance rent
was demanded and tenancy of the appellant was terminated
and despite notice of demand and termination of tenancy, the
appellant neither paid the rent nor vacated the premises G
necessitating filing of the suit.
4. The appellant traversed the plaint and denied the
relationship of landlord and tenant between the parties. The
appellant set up a specific case that the subject premises were
H
)
234 SUPREME COURT REPORTS [2009] 14 (ADDL.) S.C.R.
A not let out to him but in the family settlement dated August 23,
1993 these premises came to the share of the husband of the
respondent (Smt. Manju Gupta) but were given to the appellant
(Brij Mohan Gupta) to carry on business of Mis. Commercial
Auto Sales (P) Ltd. and the appellant was to pay Rs.10,000/-
B per month by way of compensation for use and occupation of
the premises for carrying on business of M/s. Commercial Auto
Sales (P) Ltd. although compensation of Rs.10,000/- was
designated as rent with increase every three years at the rate
of 10%.
c 5. The Small Causes Court (ADJ-II), Allahabad, after
recording evidence and hearing the parties, decreed the suit
for eviction and arrears of rent on February, 2003. The Small
C~uses Court ·considered the evidence and the family
settlement thus :
.D
"......... I perused the statement of this witness thoroughly.
A Memorandum of Understanding between the parties
regarding the property in dispute (Paper No. 68Ga Exhibit-
. 1) has been filed by the defendant in the court. This
E .. settlement det:d i~ proved by DW-1 Sanskar Gupta. I
perused the statement of DW-1 Sanskar Gupta with
respect to settlement deed. This witness for the defendant
said in his statement that I am working at the post of
Director in Commercial Auto Sales Pvt. Ltd. My mother
F was partner in M/s. Auto Sales, My mother and father and
I were partners in Auto Sales. These, Commercial Auto
Sales and M/s. Auto Sales, both are our family firms. The
business of these both the firms is being carried on at 18
Kanpur Road. After it a family settlement amongst us was
arrived on 23.8.1993. This deed is paper· no. 60Ga/1 to
G
60Ga/7. There are signatures of my father B.M. Gupta,
l'
Smt. Madhu Gupta, Sri Anil Gupta, Smt. Manju Gupta and
Sanskar Gupta on this deed, Smt. Madhu Gupta and B.M.
Gupta are my mother and father. Sri Anil Gupta and Smt.
Manju Gupta are my chacha chachi (Uncle and Auntie).
H
COMMERCIAL AUTO SALES (P) LTD. v. AUTO 235.
SALES (PROPERTIES) [R.M. LODHA, J.]
This witness in examination in -chief also said that the A
property was given to Anil Gupta by virtue of this settlement
and the business of Commercial Auto Sales was given to
Shri Brij Mohan Gupta the business of Auto Sales was
given to Anil Gupta. This witness also said in his statement
that we are doing business in the aforesaid premises by B
virtue of the family settlement. No tenancy was created
between me and Anil Gupta. We are paying Rs.10,000/-
monthly as compensation. It was settled in the family
settlement that there will be an enhancement of 10% after
three years on this amount of ten thousand. After three c
years I enhanced 10% on the amount of compensation.
Two notices were given to me on behalf of Auto Sales. No
rent was due on me at the time of aforesaid notices. This
-.. witness has admitted on page no. 13 of his statement that
there is a provision according to the terms of settlement
D
. for enhancement of rent of 10% after expiry of each three
years period. The rent was enhanced by 10% from August
1996 on the basis of this settlement. No enhancement of
10% was done in the year 1999. This witness in his cross-
examination at page 14 has admitted that it is true that I
am depositing Rs.11,000/- less in rent from August 1999. E
-_;..., The plaintiff gave notice for arrears of rent before filing of
>. the suit. This notice was received by me. There was no
rent due on me therefore I did not deposit. I thoroughly
examined the statements of aforesaid both the witnesses.
From these witnesses it is clearly proved that a family F
settlement was written between both the parties on 23/8/
1993. On the basis of which the premises in dispute was
let out to the defendant Commercial Auto Sales on rent at
the rate of Rs.10,000/- per month ....... "
G
~ 6. Before the High Court, in ·the revision application
preferred by the present appellant under Section 25 of the
Provincial Small Causes Courts Act, 1887 against the judgment
""""\
and decree for eviction and the arrears of rent, it was urged
I
that there was no relationship of landlord and tenant between H
236 SUPREME COURT REPORTS (2009] 14 (ADDL.) S.C.R.
A the parties and that the appellant was in ·occupation of the
subject premises pursuant to the family settlement. The learned
single Judge of the High Court, however, was not persuaded
.. ,
by· the contention of the appellant and held that there was no
illegality in the judgment of the trial court. He held that there was
B relationship of landlord and tenant between the parties and
consequently dismissed the revision application on December
10, 2007.
7. Mr. Altaf Ahmed, learned senior counsel for the
appellant took us through the various clauses of family
c settlement and submitted that the intention of the parties was
not to create a relationship of landlord and tenant. He would
submit that even if it be assumed that the said settlement
created lease, such lease was not determinable. He would also .
urge that Small Causes Court had no jurisdiction and -~
D competence to try the suit.
8. Mr. Jaideep Gupta, learned senior counsel for the
of
respondent stoutly defended the judgment the High Court.
9. That there was a family settlement reduced into writing·
E
on August 23, 1993 between Brij Mohan Gupta, Smt. Madhu
Gupta and Sanskar Gupta as parties of the 'first part' and Anil -4..-
Gupta and Smt. Manju Gupta as parties of the 'second part' is """
not in dispute. Some of the clauses of the said family
settlement, which are relevant, read thus:-
F
"4. It is specifically agreed that the management and
ownership of the property situated at 18-P.D. Tandon
Road, Allahabad as was earlier jointly owned by Shri Brij
--
Mohan Gupta and Anil Gupta shall exclusively vest in the
G Parties of the SECOND PART free from all charges and
encumbrances and PARTIES of the FIRST PART or any
other Persons claiming for or under trust shall not have any
kind of right, title or interest in the same.
5. M/s. Commercial Auto Sales (P) Ltd. which will be
H
COMMERCIAL AUTO SALES (P) LTD. v. AUTO 237
SALES (PROPERTIES) [R.M. LODHA, J.]
taken over by Shri Brij Mohan Gupta shall have an option A
to carry on its business activities from the show room which
is presently in its possession as per the site plan enclose
herewith, on his agreeing to pay a monthly rent of
Rs.10,000/-with a provision for increase at the rate of 10%
after the expiry of every period of 3 years and for the B
purpose of calculating increase of 10% the rent paid for
the immediately preceding block of 3 years will be relevant.
For this purpose a forma agreement, if so desired by the
PARTIES hereunto, shall be drawn up and executed.
6. Mis. Commercial Auto Sales (P) Ltd. shall C
withdraw its business from the shop situated at 37, Sheo
Charan Lal Road, Allahabad and the possession of the
same together with all rights therein shall belong to and
vest in exclusively in the Parties of the SECOND PART.
D
7. The account of the parties hereto and the
concerns in which they shall have exclusive rights after
implementation of the MEMORANDUM OF
UNDERSTANDING shall be settled on the basis of
reconciliation statement as would be prepared by M/s. S.K. E
Garg &- Co., Chartered Accountants, Allahabad, who are
hereby authorized specifically for this purpose and whose
finding shall be conclusive and binding on the PARTIES
hereto.
8. The understanding arrive at amongst the F
PARTIES of the FIRST PART and SECOND PART on its
further implementation shall be irrevocable and binding on
them and none of them and/or any other persons claiming
for or under trust ·shall be entitled to re-open the same."
G
10. When we turn to the judgment of the High Court, in the
first place, we find that the High Court proceeded on absolutely
erroneous premise that there is no specific denial of
relationship of landlord and tenant between the parties in the
written statement. The learned single Judge does not seem to H
238 SUPREME COURT REPORTS [2009] 14 (ADDL.) S.C.R.
A have fully adverted to the written statement. In the written
statement, it is stated, :
...."'
"2 ..........The accommodations in dispute was not let out
to the defendant but in the family settlement this premises
was allotted in the share of Sri Anil Gupta and the business
B
of the defendant went into the share of Sri Brij Mohan
Gupta, Smt. Madhu Gupta and Sri Sanskar Gupta and at
the time of family settlement it was settled that the business ...
of defendant shall be carried out in this premises and in
•
lieu of the use of the premises Sri B.M. Gupta will pay
c Rs.10,000/- (Rs. Ten Thousands per month) rent. ...........
5 ............ It is hereby also asserted that in view of the
family settlement dated 18.12.1993 this rent was fixed by
way of compensation for the use of premises by the
D defendant but it was designated as a rent. The alleged r
notice does not terminate- the ~lleged tenancy of the
defendant. Moreover the tenancy of the defendant cannot
be terminated and it will treated as a permanent tenancy."
Again in para 6 of the written statement it has been stated
E
thus;
"6. That the premis·es in question was already in
possession and occupation of Mis. Commercial Auto
Sales and its business was being carried on there in which
F Sri Anil Gupta the husband of Smt. Manju Gupta was also
a partner and a director by family settlement. When this
business came in to the share of Sri Brij Mohan Gupta,
Smt. Madhu Gupta and Sri Sanskar Gupta and premises
went to the share of the plaintiff it was thought in the
G settlement that the business should be carried in the same
premises and in lieu of the l.lse and occupation the
defendant is to pay Rs.10,000/- per month as· rent with
increase of 10% after every year. It is absolutely baseless
to allege that it was let ·out on rent to the defendant but in
H fact it was given in the family settlement to the defendant
COMMERCIAL AUTO SALES (P) LTD. v. AUTO 239
"
. SALES (PROPERTIES) [R.M. LODHA, J.]
to carry on business."
How could on the face of the averments in the written
A
statement, as aforequoted, it be said that there is no specific
denial of relationship of landlord and tenant between the
parties? It seems that the learned single Judge did not advert
B
to the written statement fully and properly.
_.. 11. Secondly, and very importantly, the High Court failed
to find out what was the real intention of the parties in the family
settlement with regard to retention of subject premises by Brij
Mohan Gupta for carrying on business of M/s. Commercial Auto c
Sales (P) Ltd. It is well settled that the intention of the parties
to an instrument must be gathered from the terms thereof in the
light of surrounding circumstances. In Union of India vs.
Millenium Mumbai Broadcast (P) Ltd. 1 , this Court said that a
~
document must be construed having regard to the terms and D
conditions as well as nature thereof.
12. The true nature of relationship between the parties
concerning the occupation of subject premises by the appellant
was required to be ascertained from the family arrangement
which the High Court failed to do and thereby committed grave
E
__.... error in not considering the matter in right perspective. As a
matter of fact, a material clause like clause 8 of the family
settlement has been overlooked altogether affecting decision
in the matter.
F
13. We do not intend to deal with the matter elaborately
as, in our considered judgment, the matter needs to be
reconsidered by the High Court, inter alia, on the aspects as
to whether under the family settlement dated August 23, 1993,
a relationship of lessor or lessee (or for that matter landlord and G
tenant) came into existence between the parties and, if answer
to the said question is in the affirmative, whether such lease is
determinable.
14. In what we have discussed above, appeals are allowed
H
240 SUPREME COURT REPORTS [2009] 14 (ADDL.) S.C.R. r-
•
A to the aforesaid extent and judgment of the High Court dated "-
December 10, 2007 is set aside. Civil Revision No. 275 of
2003 is restored to the file of the High Court for fresh decision
as indicated above and in accordance with law. We request
the High Court to expedite the hearing of revision petition and
B dispose of the same as expeditiously as may be possible and
preferably within four months. Parties will bear their own costs.
D.G. Appeal partly allowed.
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