M/S A J SHETTY AND CO. PVT. LTD v. ST ANTONY’S CHARITY INSTITUTES

LORD BISHOP OF MANGALURU PRESENT INCUMBENT BEING MOST. REV. DR.PETER PAUL SALDANA …APPELLANT - 2 - NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 AGED ABOUT 58 YEARS S/O LAZARUS SALDANHA REP. BY HIS GPA HOLDER REV. FR. MAXIM GEZALD ROSARIO AGED ABOUT 50 YEARS S/O BONAVENTURU ROSARIO R/AT BISHOPS HOUSE MANGALURU – 575 003

ADMINISTRATOR AND DIRECTOR PRESENT INCUMBENT BEING REV. FR. JOHN BAPTIST CRASTA AGED ABOUT 67 YEARS S/O LEO CRASTA R/AT ST.ANTONY’S CHARITY INSTITUTES JEPPU, MANGALURU P B NO.506, JEPPU MANGALURU – 575 001

M/S KUDUPI SRINIVASA SHENOY & CO. A PARTNERSHIP FIRM(REGD.) HAVING REGISTERED OFFICE AT NEW FIELD STREET MANGALURU – 575 003 REP. BY ITS MANAGING PARTNER …RESPONDENTS (BY SRI UDAYA HOLLA, SENIOR COUNSEL FOR SRI CYRIL PRASAD PAIS, ADVOCATE FOR C/R1 & R2; NOTICE TO R3 HELD SUFFICIENT V/O DTD: 18.01.2021) THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION 96 READ WITH ORDER XLIII RULE 1 OF CPC PRAYING TO SET ASIDE THE JUDGMENT AND DECREE DATED 15.02.2018 PASSED IN O.S. NO.144/2011 ON THE FILE OF THE III ADDITIONAL SENIOR CIVIL JUDGE, MANGALORE, D.K. DECREEING THE SUIT FOR POSSESSION AND MESNE PROFIT. RFA No.2328/2019: BETWEEN: A J SHETTY & CO. PVT. LTD. FALNIR ROAD C/O HOTEL MOTIMAHAL MANGALURU – 575 001 REP. BY ITS MANAGING DIRECTOR A J SHETTY S/O LATE SANKAPPA SHETTY AGED ABOUT 75 YEARS …APPELLANT (BY SMT.ANUPARNA BORDOLOI, ADVOCATE) - 3 - NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 AND: ST. ANTONY’S CHARITY INSTITUTES JEPPU MANGALORE – 575 001 REP. BY ITS ADMINISTRATOR AND DIRECTOR BEING REV. FR. DENIS MORAS PRABHU S/O FRANCIS MORAS P B NO.506, JEPPU MANGALURU – 575 001 …RESPONDENT (BY SRI UDAYA HOLLA, SENIOR COUNSEL FOR SRI CYRIL PRASAD PAIS, ADVOCATE) THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION 96 OF CPC PRAYING TO SET ASIDE THE JUDGMENT AND DECREE DATED 15.02.2018 PASSED IN O.S.NO.162/2014 ON THE FILE OF THE III ADDITIONAL SENIOR CIVIL JUDGE, MANGALORE, D.K., DISMISSING THE SUIT. RFA CROB No.1/2019: BETWEEN:

1. ST.ANTHONY’S CHARITIES INSTITUTE POST BOX NO.506, JEPPU MANGALURU A CHARITABLE TRUST REP. BY LORD BISHOP OF MANGALURU PRESENT INCUMBENT BEING RT.REV.DR.PETER PAUL SALDANA S/O LATE LAZARUS SALDANA AGED ABOUT 54 YEARS REP. BY HIS GPA HOLDER REV. FR.WILLAM MENEZES AGED ABOUT 60 YEARS S/O LIGOURY MENEZES R/AT BISHOP’S HOUSE MANGALURU - 575 003

2. THE ADMINISTRATOR & DIRECTOR PRESENT INCUMBENT BEING REV.FATHER ONIL D’SOUZA S/O BONIFACE D’SOUZA AGED ABOUT 48 YEARS R/AT ST.ANTHONY’S CHARITY INSTITUTE JEPPU – 575 001, MANGALURU …CROSS OBJECTORS BY SRI UDAYA HOLLA, SENIOR COUNSEL FOR SRI CYRIL PRASAD PAIS, ADVOCATE - 4 - NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 AND:

1. M/S. KUDPI SRINIVASA SHENOY & COMPANY A PARTNERSHIP FIRM HAVING ITS REGISTERED OFFICE AT NEW FIELD STREET MANGALURU -575 003 REP. BY ITS MANAGING PARTNER

2. M/S A.J.SHETTY AND COMPANY PVT. LTD. A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE INDIAN COMPANIES ACT, 1956 REP. BY ITS DIRECTOR MR. A J SHETTY AGED ABOUT 75 YEARS S/O SANKAPPA SHETTY CARRYING ON BUSINESS AT MOTI MAHAL, FALNIR MANGALORE – 575 001 AND R/AT "LAXMI" OPP:COLACO HOSPITAL BENDORWELL, MANGALURU …RESPONDENTS (BY SMT.ANUPARNA BORDOLOI, ADVOCATE FOR R2; NOTICE TO R1 HELD SUFFICIENT V/O DATED 21.01.2020) THIS REGULAR FIRST APPEAL CROSS OBJECTION IS FILED UNDER ORDER XLI RULE 22 OF CPC PRAYING TO SET ASIDE THE JUDGMENT AND DECREE DATED 15.02.2018 PASSED IN O.S.NO.144/2011 ON THE FILE OF THE III ADDITIONAL SENIOR CIVIL JUDGE, MANGALORE, DECREEING THE SUIT FOR POSSESSION AND MESNE PROFITS AND DIRECT RESPONDENT NO.2 TO PAY MESNE PROFITS AT RS.1,00,000/- PER DAY BY ENHANCING THE SAME FROM RS.50,000/-. THESE REGULAR FIRST APPEALS AND RFA CROSS OBJECTION COMING ON FOR FURTHER HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MRS JUSTICE K.S.MUDAGAL AND HON'BLE MR JUSTICE VENKATESH NAIK T - 5 - NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 ORAL JUDGMENT (PER: HON'BLE MRS JUSTICE K.S.MUDAGAL) Challenging the common judgment and decree O.S.No.144/2011 and O.S.No.162/2014, the parties therein have filed the above appeals and cross-objection. Particulars of the said cases are as follows: Sl. No. 1 2 3 Particulars O.S.No. Appellant/Cross Objector RFA No.525/2018

144/2011 Defendant No.2 RFA No.2328/2019 Plaintiff RFA Crob. No.1/2019 144/2011 Plaintiff/Cross-objector

2. The appellant in R.F.A.No.525/2018 was defendant No.2, respondent Nos.1 and 2 were the Administrators of the plaintiff Charitable Trust and respondent No.3 was defendant No.1 before the Trial Court. Parties are referred to henceforth according to their ranks in R.F.A.No.525/2018.

3. The brief facts of the case are as follows: (a) Subject matter of both the suits is as follows: Immovable property situated at Attavar Village of Mangalore Taluk within Falnir Ward of Mangalore City Corporation and within the Registration Sub-District of Mangalore City and comprised in: - 6 - NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 Item No. 1 2 RS. No. TS NO. 173-A2 15-A2 174 16 Total Extent A/C 1-18.50 0.52 1-70.50 Item Nos.1 and 2 form a compact block. (b) The said property belonged to Milagres Church. The said institution transferred the property to the Private Trust on perpetual lease/mulageni under the deed dated 20.08.1912. The said land consisted of coconut and arecanut garden. Under the registered lease deed dated 23.09.1961, Trust of respondent Nos.1 & 2 let out the said property to respondent No.3 by name M/s. Kudupi Srinivasa Shenoy and Co., for term of 50 years on a monthly rent of Rs.852.50/-. Under the said lease, lessee was authorized to construct building and make other improvements to generate income.

Respondent No.3 was also authorized to sub lease the property or assign his interest in the property. The said M/s.Kudupi Srinivasa Shenoy and Co., in turn under the registered document dated 03.02.1984 (Ex.P2) styled as sale deed, assigned its rights of tenancy to the present appellant. (c) The terms of the first lease dated 23.09.1961 expired on 22.09.2011. In the meanwhile, on 11.04.1986, appellant wrote letter Ex.P22 to Trust of respondent Nos.1 & 2 - 7 - NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 purportedly seeking fresh lease. Trust of respondent Nos.1 & 2 by reply dated 05.06.1986 (Ex.P23) declined the request of the appellant for extension of said period. Before expiry of the lease, the appellant by letter dated 12.10.2009 (Ex.P3) again sought extension of lease for another 50 years. Trust of respondent Nos.1 & 2 by letter dated 08.02.2010 (Ex.P4) declined extension of lease and called upon the appellant to hand over possession of the property.

There were similar correspondences as per Exs.P6, P8, P10, P11, P14, P15 and P16 between the appellant, the Trust and Church seeking extension of lease and denying the same. (d) Ultimately on 12.10.2011 respondent Nos.1 & 2 filed O.S.No.144/2011 before III Additional Senior Civil Judge, Mangalore for ejectment and mesne profits against the appellant and respondent No.3 M/s.Kudupi Srinivasa Shenoy and Co. (e) Appellant filed O.S.No.165/2012 before Principal Civil Judge (Junior Division) & JMFC, Mangalore seeking specific performance of the contract. In the said suit, the appellant contended that as per Clause 4 of lease deed Ex.P1, Trust of respondent Nos.1 & 2 were required to give option to the appellant/lessee for renewal of lease for further - 8 - NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 period. Therefore, he filed the suit exercising such right. Subsequently, O.S.No.165/2012 was transferred to the Court of III Additional Senior Civil Judge, Mangalore for adjudication along with O.S.No.144/2011. On such transfer, the transferred suit was renumbered as O.S.No.162/2014.

The Trial Court consolidated both the suits and recorded common evidence. Trust of respondent Nos.1 & 2 denied interpretation of Clause 4 of the lease deed and right of the appellant seeking specific performance. Similarly, in O.S.No.144/2011 the appellant challenged the right of Trust of respondent Nos.1 & 2 to seek decree for possession and claimed that the appellant is entitled for specific performance and extension of lease for another 50 years.

Based on the pleadings of the parties, in both cases, the Trial Court framed the following issues and additional issues: Issues framed in O.S.No.144/2011

1. Whether the plaintiff proves that the defendants are liable to surrender vacant possession of the suit schedule premises?

2. Whether the defendants are liable to pay mesne profits at the rate of Rs.1,00,000/- per day from

23.09.2011? - 9 - NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019

3. Whether the defendants are liable to pay interest at the rate of 18% p.a. on mesne profits?

4. Whether the defendants are liable to pay damages?

5. Whether the suit is overvalued so as to bring it within the jurisdiction of this Court?

What order or decree? Additional Issue framed on 15.10.2014:

1. Whether the defendant No.2 proves that the lease agreement entered between the parties to the suit is compulsorily renewable? Additional Issue framed on 27.11.2017:

1. Does plaintiff prove is a Charitable Institution and that the suit property was let out for commercial purpose and reasons Karnataka Rent Act is not applicable to the suit property as pleased in para 14 of the plaint? Issues framed in O.S.No.165/2014:

1. Whether the plaintiff proves that by virtue of sale deed dated 03.02.1984 plaintiff has acquired right to seek renewal of lease?

2. Whether the plaintiff proves that he has been ready and willing to perform his part of the obligation?

3. Whether the plaintiff is entitled to seek specific performance of the agreement to renew the lease? - 10 - NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019

4. Whether the defendant proves that the clause of lease deed enabling renewal of lease is ambiguous and unenforceable?

5. Whether the plaintiff is entitled for the relief as prayed in the plaint?

6. What order or decree?

6. Parties led common evidence. On behalf of respondent Nos.1 & 2, PW.1/respondent No.2 was examined and Exs.P1 to P33 were marked. On behalf of the appellant, the appellant was examined as DW.1 and Exs.D1 to D4 were marked. M/s.Kudupi Srinivasa Shenoy & Co., which was defendant No.1 in O.S.No.144/2011 did not contest the suit.

The Trial Court on hearing the parties, by impugned common judgment dismissed O.S.No.162/2014 and decreed O.S.No.144/2011. The Trial Court directed the appellant to handover vacant possession of the suit schedule property within 30 days. The Trial Court further directed that the appellant and respondent No.3 shall pay mesne profits at the rate of Rs.50,000/- per day from 03.09.2011 to

01.10.2011 and also from the date of suit, till the date of delivery of possession of the property and awarded interest at the rate of 15% on mesne profits. - 11 - NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019

Appellant filed the above appeals challenging dismissal O.S.No.162/2014 R.F.A.No.2328/2019 and decree in O.S.No.144/2011 R.F.A.No.525/2018. Respondent Nos.1 & 2 filed cross-objection in R.F.A.Crob. No.1/2019 questioning adequacy of mesne profits awarded in O.S.No.144/2011. Submissions of Smt. Anuparna Bordoloi, learned Counsel for the appellant:

The findings of the Trial Court that under Ex.P1 the appellant did not become lessee, therefore he is not entitled to seek specific performance is arbitrary, illegal and contrary to the terms of Ex.P1. The finding of the Trial Court that there was no privity of contract is also unsustainable, as Trust of respondent Nos.1 & 2 has recognized the tenancy by accepting the rents for many years. The Trial Court was not justified in dismissing the claim for specific performance on the ground that Trust of respondent Nos.1 & 2 were required to take permission of the District Judge/Court to lease its property. As Trust of respondent Nos.1 & 2 is not a Public Charitable Trust, Section 36 of the Indian Trust Act, 1882 (‘Trust Act’ for short) is not applicable. Similarly, rejection of the prayer for specific performance on the ground of undue hardship to Trust of - 12 - NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019 respondent Nos.1 & 2 or unfair advantage to the appellant is also unsustainable. For assessing mesne profits, as per Order XX Rule 12 of CPC, separate enquiry needs to be conducted. The Trial Court was in error in granting mesne profits without any such enquiry. No evidence was adduced on the side of respondent Nos.1 & 2 to prove mesne profits. Thus the impugned judgment and decree for ejectment and dismissal of the suit for specific performance are liable to be set aside. Appellant’s suit be decreed and the suit of respondent Nos.1 & 2 for ejectment and mesne profits be dismissed.

In support of her submissions, she relies on the following judgments:

3. 4. 5. 6. 7.

8. Secy. Of State v. Digambar Nanda and ors1 Maharaja Bahadur Sir Prodyot Coomar Tagore v. Maynuddin Mia and ors.2 Radha Kamal v. Puri Municipality and ors.3 Ramesh Chandra Das v. Atul Chandra Sarkar4 Syed Jaleel Zane v. P.Venkata Murlidhar and ors.5 Girindra Chandra Das v. Kamini Nath Roy and Ors.6 H.V.Rajan v. C.N.Gopal and ors.7 Delhi Development Authority v. Durga Chand Kaushish8 1 1917 SCC OnLine Cal 458 2 1938 SCC OnLine Cal 204 3 1953 SCC OnLIne Ori 32 4 AIR 1959 Gau 22 5 1980 SCC OnLine AP 26 6 1949 SCC OnLine Gau 29 7 1959 SCC OnLine Kar 125 8 (1973) 2 SCC 825 - 13 - NC: 2024:KHC:37740-DB RFA No.525/2018 C/w RFA No.2328/2019 RFA.CROB No.1/2019

9. State of U.P. and ors. v. Lalji Tandon9

10. Damodhar Tukaram Mangalmurti and ors v. State of Bombay10

Khivraj Chordia v. Esso Standard Eastern Inc.11

The Trustees of Port of Tuticorin v. The Tuticorin Salt and Marine Chemicals Ltd.12 Submissions of Sri Udaya Holla, learned Senior Counsel appearing on behalf of Sri Cyril Prasad Pais, learned Counsel for respondent Nos.1 and 2 on record. 11 (a). Admittedly, term of lease expired on

22.09.2011. Clause regarding option of renewal was available only to the original lessee (respondent No.3) and not the appellant. Even otherwise, the clause was ambiguous, as terms of lease and rate of rent were not specified in the said Clause. Such agreement cannot be specifically enforced. As the term of lease had completed, the appellant was bound to handover vacant possession of the property. Appellant had enjoyed the property for a period of 27 years and amassed huge wealth out of the income generated from suit schedule property. Whereas, Trust of respondent Nos.1 & 2 is charitable trust catering to the needs of the destitute and underprivileged. To serve the said cause, the Trust of respondent Nos.1 & 2 need funds. ORDER R.F.A.No.525/2018 R.F.A.No.2328/2019 dismissed with costs. R.F.A.Crob. No.1/2019 is dismissed. Appellant is hereby directed to hand over vacant possession of the property within 60 days from the date of this judgment. Sd/- (K.S.MUDAGAL) JUDGE Sd/- (VENKATESH NAIK T) JUDGE KSR List No.: 1 Sl No.: 38