SHANTILAL KRISHNADAS PAREKH AND OTHERSVERSUSRAMANLAL HEMLAL BHARATIYAMr v. J. Dixit a

Legal Reasoning

IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABAD1 SECOND APPEAL NO. 63 OF 1992SHANTILAL KRISHNADAS PAREKH AND OTHERSVERSUSRAMANLAL HEMLAL BHARATIYAMr. V. J. Dixit a/w Mr. S. V. Dixit and M. D. Deshpande i/b Mr. U. S. Malte,Advocate for the appellants Mr. V. R. Dhorde, Advocate for respondent nos.1-A to 1-D, 2-A and 2-B.CORAM: R. M. JOSHI, J.DATE22nd JANUARY, 2025PER COURT :-1.This appeal is filed under Section 100 of the Code of CivilProcedure to take exception to the judgment and decree passed by thefirst Appellate Court in R.C.A. No. No.517/1983, whereby the judgmentand decree passed by the trial Court in R.C.S. No. 54/1979 of decreeingthe suit came to be set aside and consequently suit filed by theappellants/plaintiffs stood dismissed.2.Parties are referred to as ‘plaintiffs’ and ‘defendants’ for thesake of convenience.3.In order to appreciate the questions involved in this appeal, itis necessary to take into consideration the relevant facts of the casewhich are narrated in brief as under:1.sa63.92.odt1 of 10 (i)Plaintiffs are the owner of the City Survey No. 3176situated at Kasbe Dharangaon, Tq. Erandol, District Jalgaon.Plaintiffs claim that they are conducting business of cinema theaterin the name and style ‘Kumar Talkies’ from the said premises. Theplaintiffs are owner of the land, structure as well as the machineryand other articles used for cinema theater. It is further case of theplaintiffs that there was an agreement dated 11/10/1961 betweenplaintiffs and defendants for conducting the said business ofcinema theater, for a period of three years. On 23/02/1964 anotheragreement came to be executed between them with increase in thelease rent. It is the case of the plaintiffs that the defendants didnot pay lease rent from 01/11/1971. Defendants however filedapplication for determining standard rate being Misc. CivilApplication No. 1/1978 before the Civil Court. It is contended bythe plaintiffs that notice dated 23/01/1978 was wrongly issuedunder the provisions of Bombay Rents, Hotel and Lodging HouseRates (Control) Act (for short ‘Rent Act’), however, subsequentlynotice dated 13/01/1979 came to be issued under Section 106 ofTransfer of Properties Act. On the basis of the said cause of action,suit was filed.(ii)Defendants filed written statement contending that the1.sa63.92.odt2 of 10 premises and the other articles are taken on rent under differentagreements. It is claimed that the existing machinery was sold andnew machinery was purchased in which no loss has been caused tothe plaintiffs but in fact plaintiffs were profited by the same. It isdenied that the defendants have failed to pay rent and whereinarrears thereof. It is further claimed that application was filedbeing Misc. Civil Application No. 1/1978 and pursuant to the samethe amount of rent is deposited in the Court. It is specificallyclaimed that parties are governed by Bombay Rents, Hotel andLodging House Rates (Control) Act and rights are accrued in favourof the defendants in respect of the suit property.4.Learned counsel for both sides are heard.5.The following substantial questions of law arise in this appeal.(i)Whether the first Appellate Court has committed error inappreciation of the evidence on record and the case of the partiesand this has resulted in to recording of perverse findings and inconsequence dismissal of the suit.(ii)Whether the first Appellate Court has committed errorin interpreting the agreement (Exhibit 62) between the parties andhas consequently drawn incorrect conclusion that the suit premisesis covered by the provisions of Rent Act. 1.sa63.92.odt3 of 10 6.Learned counsel for the appellants/plaintiffs submits that thefirst Appellate Court has erred in interpreting the document andappreciating pleadings and the case sought to be made out the by theplaintiffs before Trial Court. It is his submission that trial Court hasrightly considered the pleadings and evidence on record moreparticularly the document i.e. agreements entered into the between theparties in respect of the conducting of the business of cinema theater. Byreferring to the relevant agreements it is his submission that the termsof the said agreement more than sufficiently demonstrate that it was acase of a running business being conducted by the defendants on behalfof the plaintiffs and not the case of letting out the premises along withthe machinery etc. He made grievance in respect of the judgment of thefirst Appellate Court on the ground that the said Court has failed to takeinto consideration the pleadings and evidence on record in properperspective and dismissed the suit on the general ground that it ispermissible under the provisions of Bombay Rent Act to let out apremises along with the machinery. It is his submission that the crux ofthe matter about the agreement between the parties and its terms iscompletely overlooked.7.Learned counsel for the defendants on the other hand hassupported the impugned judgment and order. It is his submission that1.sa63.92.odt4 of 10 trial Court had committed error in making observation that the judgmentof the Hon’ble Supreme Court in case of Dwarka Prasad VersusDwarkadas Saraf, (1976) 1 SCC 128 is upheld in the subsequentjudgment in case of Natraj Studios (P) Ltd Versus Navrang Studios andAnother, (1981) 1 SCC 523. He took pains to draw attention of the Courtto the observation made by the Hon’ble Supreme Court in the saidjudgment more particularly paragraph nos. 13 and 14 thereof. It is hissubmission by relying observation made therein that the Hon’bleSupreme Court did not find the submissions made on behalf of theplaintiffs acceptable that the dominant purpose of agreement was not forlicense to use the building but only incidental. Learned counsel for therespondent has also placed reliance on the judgment in case ofMohammad Jaffer Ai V. S. Rajeswara Rao and others, AIR 1971 AndhraPradesh 156. 8.There is no dispute about the fact the parties have enteredinto agreements in question. The issue is as to whether conducting thebusiness of cinema theater is dominant purpose or sole purpose or not.Undeniably it was a running business which is being conducted bydefendants. Agreement dated 10/10/1961 reveals the intention of theparties. It would be apt to take note of the relevant clauses of the saidagreement dated 10/10/1961 (Exh. 62), which are reproduced thus:1.sa63.92.odt5 of 10 ^^4- ,ihMsehd oxSjs dkj.kkus ljdkjh o fue ljdkjh dkj.kkus ¼gqdqekus½ flusek15 fnolkis{kk tkLr fnol can Bsokok ykxY;kl R;k eqnrhps HkkMs rqEgh vkEgkal lwVn;ko;kps vkgs- ljdkjh o fue ljdkjh fu;ekuqlkj nq:Lrh vxj uohu dkesbZysDVzhdy bULisDVj vFkok vs-ih-MCY;w-Mh- baftuhvj ;kauh nk[kfoY;kl rh nq:Lrho uohu dkes rqEgh eqnrhr d:u n;ko;kph vkgsr- -----11-rqepsdMwu flusek Vkdht HkkM;kus ?ksrsosGh rqEgh dsysy;k dkWuVzDr iSdh tsfiDplZ pkyfo.;kps f’kYyd vlrhy rh loZ rqeps dkWuVzDrps ‘krhZizek.ks vkEghpkyow o R;kps MhLVzhC;wVjps ‘ksvjph o bUlLVsUM VDlph jDde vkEgh ijHkkjsHk: o R;k R;k MhLVzhC;wVjps rqeph MhikW>hVph jDde o ?ks.ks jDde vkEgh R;kaps‘ksvj e/kwu dkiwu ?ksow o rh rqEgkal Hk:- R;kcn~ny vykfgnk ;knh rqEgkal vkEghnsow- rqeps dkWuVzDriSdh pky.kkjs fiDpjpk jksthpk dysD’ku fjiksVZph uDdyrqEgkl nsow-**.Clause nos. 4 and 11 in particular clearly shows that this isnot an agreement of lease between the landlord and appellant, but theonly intention of the parties reveals therefrom is that the main purposeof the said agreement was to conduct the business of running a cinematheater by defendants on behalf of the plaintiffs. The subsequentagreement dated 22/02/1964 also reaffirms intention of parties andagree terms of the previous agreement. It would be material to takenote of relevant clauses of this agreement too, which reads thus:^^1- ‘krZ ua- 1 e/khy Bjkok,soth fl-l-ua- 3176 e/khy fFk;sVjps HkkMs njegk :i;s45¾00 ¼iapspkGhl½ o ef’kujh oxSjsps HkkMs njegk :i;s 205¾00 ¼nksu’ks ikap½,dw.k :i;s 250¾00 ¼nksu’ks iUukl½ vkEgh rqEgkal njegkps njegk uohu flusekpkyw >kysiklwu nsr tkos- tquh ef’kujh dk<wu Vkdys iklwu uohu ef’kujhclsi;Zar HkkMs gs flusek can vlyk rjhgh vkEgh rqEgkal tqU;k HkkM;kps Bjkokizek.ksnsow-2- uohu ef’kujh clfo.kspk IyWUl eatwj >kyk vkgs- R;kizek.ks uohuef’kujh vk.kwu fQVhaxps o ikflaxps dke pkywp vkgs o R;kph Vzk;y ?ksowu pkyw1.sa63.92.odt6 of 10 d:u ?ks.;kps dke vkEghp d:- eVsfj;ypk [kpZ rqEgh djkok-3- ‘krZ ua- 8 e/khy dzwM vkWbZy o vkWbZy,soth bysDVzhd ikWojps fcy ;sbZy rsvkEgh njegkps njegk ijHkkjs osGpsosGh nsr tkow- baLVkWys’kupk [kpZ rqEgh djok-rsFks Hkjko;kph fMikW>hV vkEgh Hk:-4- ckdhP;k fnukad 11@10@1961 djkjukE;kps ‘krhZ vkEgkal t’kkP;k r’;kpdcqy vkgsr-5- bysDVzhd baLVkWys’kupk [kpZ rqEgh djkok o fMikW>hV vkEgh Hk:-**9.The above clauses exhibit intention of parties and conduct ofbusiness by defendants on behalf of plaintiffs, when it says that theexpenses towards fitting new machinery was to be borne by thePlaintiffs. So also electric installation to be done not by defendants butplaintiffs. One can understand that a landlord’s permission is required forthe purpose of effecting any structural changes in the premises.However, it does not stand to any reason whatsoever as to why thelandlord would spend for the business of tenant. These clauses thereforeconclusively establish that the agreement between parties was notintended to create any tenancy but the defendants were to conductbusiness of the plaintiffs.10.Learned trial Court has considered in detail the terms ofagreement and has recorded correct findings that the dominant purposeof agreement is for running of business and not to let out the premises.Appellate Court however misdirected itself in appreciating case sought to1.sa63.92.odt7 of 10 be made out by Plaintiffs and admitted evidence on record. 11.The first Appellate Court has placed reliance on the judgmentof the Hon’ble Supreme Court in case of Natraj Studios (P) Ltd (citedsupra) to draw conclusion in favour of defendants. Perusal of the saidjudgment indicates that the issue involved before the Hon’ble SupremeCourt therein was as to whether a premises which is a business premisesand let out along with machinery can be considered as a premises underSection 5(8-A) of the Rent Act. The Hon’ble Supreme Court hasanswered the said question in affirmative. In the said case however nospecific case seems to have been made out that the agreement is aboutconducting running business by one person on behalf of another. It didnot fall for consideration by the Court to determine dominant purpose orintention of the parties, in entering into the agreement.12.As far the judgment of the Full Bench of Andhra Pradesh HighCourt is concerned, the said judgment is passed in a reference where thereference was on the point as to “Whether a lessee of a cinema theater isa tenant, and not liable to be evicted otherwise than under the Act”.There cannot be any dispute about the general law that the lessee of thecinema theater can be tenant. The question arises herein is as towhether the parties intended to create a lease or a running business wasgiven for the purpose of conducting the same to the defendants. This1.sa63.92.odt8 of 10 judgment therefore has no application to the present case since theseare altogether on different footings.13.Though otherwise no error could have been found with thefirst Appellate Court holding that in case where there is a lease of abuilding along with machinery or premises used for the purpose ofbusiness, such premises is covered under the provisions of the Rent Act.However, such finding is not appropriate in the facts and circumstancesas they exist in the instance case.14.First Appellate Court was required to consider pleadings andthe terms of agreement between the parties and to cull out the intentionfrom terms of the agreement. Apparently the first Appellate Court hascommitted error in interpreting the said agreements. As such thejudgment of the first Appellate Court cannot sustain. The substantialquestions of law noted above are answered in affirmative. The judgmentand decree passed by the first Appellate Court is set aside. Thejudgment and decree passed by the trial Court stands restored.15.After pronouncement of this order, learned counsel for therespondent/ original defendants seeks stay to this order for a period ofsix weeks. Learned counsel for the appellant objects to the same.16.Appellate Court had dismissed suit and the same is decreed1.sa63.92.odt9 of 10 now. The appeal was pending from 1994 and the same is decided today,as such, there is no justification to refuse the request. Hence, this orderis stayed for a period of six weeks. (R. M. JOSHI, J.)ssp1.sa63.92.odt10 of 10