G.REGHUNATHANversusK.V. VARGHESE

.A                             G.REGHUNATHAN
                                       v.
                                K.V. VARGHESE

                                AUGUST 23, 2005
B
            [R.C. LAHOTI, CJ AND P.K. BALASUBRAMANYAN, J.]

           Kera/a Buildings (Lease and Rent Control) Act, 1965-Sections 11
     (2) & 11 (4) (ii)-Premises let out for setting up a shop for carrying on
     gold and silver jewellery business-Tenant defaulting in payment of rent
C    and making major alterations to the premises without the consent of
     landlord-Landlord filing eviction petition be/ere Rent Controller for wilful
     default of payment of rent and for destroying/reducing the value and utility
     of the premises materially and permanently-Rent Controller, Appellate
     Authority and High Court holding in favour of landlord-Correctness of-
D    Held, tenant is liable to be evicted only if the landlord proved that the
     value or utility of the premises is materially and permanently affected by
     the act of the tenant-On facts, landlord has failed to prove it-Hence,
     eviction order is set aside gra1zting the tenant two months time for payment
     of arrears of rent to the landlord .

E           Appellant-tenant took on rent a room in the building belonging to
     respondent-landlord for setting up a shop for carrying on gold and
     silver jewellery business. As per the agreement, a sum of Rs.85,000 was
     given to the landlord as security by the tenant. The tenant was allowed
     to install electrical fittings and all necessary instruments or equipments
F    in the room for the purpose of his business. The tenant removed a door
     and three windows from the walls of the room and closed up the open-
     ings, cut off the rafters in the front to a length of two-feet and lowered
     the level of the floor by one foot. He also erected two pillars touching
     the walls and fixed a rolling shutter in front of the shop. These were done
     without the written permission of the landlord. The tenant failed to pay
G    the rent to the landlord from the very next month of the agreement
     itself.

          The landlord issued a notice under section 11(2) of the Kerala
     Buildings (Lease and Rent Control) Act, 1965 calling upon the tenant
H    to pay the rent in arrears. On the failure by the tenant to tender the
                                         848
               G. REGHUNATHANv. K.V. VARGHESE                       849

rent, the landlord filed an eviction petition before Rent Controller        A
against the tenant for wilful default of payment of rent and for destroy-
ing or reducing the value and utility of the premises materially and
permanently. under section 11(2) and 11(4)(ii) of the Act respectively.
The Rent Controller allowed the eviction petition of the landlord on
both the grounds. The appeal filed by the tenant before the Appellate       B
Authority challenging the Rent Controller's order was also dismissed.
The tenant filed a revision petition before High Court under the Act.
The High Court dismissed the revision petition. Hence the appeal by the
tenant before this Court.

      Allowing the appeal, the Court                                        c
      HELD : 1.1. For seeking eviction under section l 1(4)(ii) of the
Kerala Buildings (Lease and Rent Control) Act, 1965, the user should
destroy or reduce the value or utility of the building materially and
permanently. Even if the user leads to some reduction in the value or
utility of the building, eviction cannot be ordered. But, if the value or   D
utility is materially and permanently affected, an order for eviction
could be passed. The destruction or damage has to be adjudged from
the stand point of the landlord. The respondent landlord has not pleaded
that the alterations made by the appellant tenant have destroyed or
reduced the value or utility of the building materially and permanently.    E
The words "material and permanent" are ...not disjunctive like in some
other Acts. The landlord had not proved the material and permanent
impairment in value or utility. The landlord admits that he will get a
higher rent ifthe room is again let out. The landlord has failed to prove
that the acts of the tenant constitute the user of the building in such a
manner as to destroy or reduce the value or utility of the building         F
materially and permanently. Hence the order for eviction under section
11(4)(ii) of the Act is set aside. [857-A-E]

    Manmohan Das v. Bishun Das, [1967] 1 SCR 836; Om Prakash v.
Amar Singh, AIR (1987) SC 617; Brijendra Nath v. Harsh Wardhan, [1988]
                                                                            G
2 SCR 124; Arunachalam {died) through LRs & Anr. v. Thondarperienambi
& Anr., AIR (1992) SC 977; Vipin Kumar v. Roshan Lal Anand, [1993]
2 SCC 614 and Waryam Singh v. Baldev Singh, [2003] l SCC 59, referred
to.

      Ahammad Kanna v. MuhammedHaneef (1967) K.L.T. 841; Ayissabeevi        H
    850                  SUPREME COURT REPORTS (2005] SUPP. 2 S.C.R.

A   v. Aboobaker, (1971) K.L.T. 273; Shanmugam v. Rao Saheb, (1988) 1
    K.L.T. 86; Prabodhini v. Rajammal, (1991) 1 K.L.J. 113; Thankappan v.
    Reji. Xavier, (1995) 1 K.L.J. 86; Mathew v. Gzlbert, (1998) 2 K.L.T. 19;
    Aboobacker v. Nanu, (2001) 3 K.L.T. 815; Seethalakshmi Ammal v.
    Nabeesath Beevi, (2003) 1 K.L.T. 391, referred to.
B
         2. When the appellant tenant had pleaded that he had deposited the
    rent even while filing his objectiori in the Rent Control Court, it is not
    necessary to pronounce finally on this question. It is clarified that the
    tenant will have two months from the date of judgment to deposit the rent
    in arrears till date and the other sums in terms of Section 11 (2) (c) of the
C   Act so as to avert the execution of the order for eviction on the ground of
    arrears of rent granted under section 11(2) of the Act. [858-C-D-E)

         Modern Hotel v. K. Radhakrishnaiah, [1989) 2 SCC 686 and
    K. Narasimha Rao v. T.M Nasimuddin Ahmed, [1996) 3 SCC 45, referred
D   to.

          Issac Ninan v. State of' Kera/a, (1995) 2 KLT 848, referred to.

         CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5188 of
    2005.
E
        From the Judgment and Order dated 17.12.2003 of the Kera! High
    Court at Ernakulam in C.R.P. No. 1628 of 1997 (C).

          C.K. Sasi for the Appellant.

F         Dhruv Mehta, A. Raghunath and A.D. Sikri for the Respondent.

          The Judgment of the Court was delivered by

          P.K. BALASUBRAMANY AN, J. : Leave granted.

G         1. The tenant is before us. He is the tenant of a building governed by
    the Kerala Buildings (Lease and Rent Control) Act, 1965 (hereinafter called
    "the Att"). He took on rent a room in the building belonging to the respond-
    ent-landlord. He executed an unregistered, insufficiently stamped rent deed
    on 5 .9 .1988 which was accepted by the landlord. He ::ntered into possession
H   thereunder. The lease was taken for the purpose of conducting a gold and



                                                                                    -
    G. REGHUNATHAN v. K.V. VARGHESE [BALASUBRAMANYAN, J.] 851

silver jewellery shop. As per the rent deed, the term of the lease was 15          A
years. The rent payabie was Rs.750 a month. A sum ofRs.85,000 was given
to the landlord as security. That amount was to be returned to the tenant
when he vacated the room. The monthly rent of Rs. 750 was to be paid by
the 5th of the succeeding month. The tenant was given the right to install
electrical fittings and to take water and telephone connections. He had the        B
right to install all necessary instruments or equipments in the room for the
purpose of gold and silver business.

      2. Disputes seem to have arisen immediately thereafter. The tenant did
not tender the rent that fell due on 5.10.1988. He removed a door and three
windows from the walls of the room and closed up those openings. He cut-           C
off the rafters in the front to a length of two feet. He lowered the level of
the floor by one foot. He erected two pillars touching the walls and fixed
a rolling shutter in front of the shop. These were done without the written
permission of the landlord.
                                                                                   D
      3. The landlord issued a notice in terms of the proviso to Section l l (2)
of the Act. He called upon the tenant to pay the rent in arrears. The tenant
failed to tender the rent. He tiled an application R.C.P. No.2of1990 before
the Rent Controller for eviction of the tenant. He invoked Section l l (2) of
the Act pleading that the tenant had not paid or tendered the rent due by
him for the period from 5.10.1988 to 3 l.12.1990 in spite of the statutory         E
notice. He also relied on the ground under Section l l(4)(ii) of the Act. He
alleged that the tenant had used the building in such a manner as to destroy
or reduce its value or utility materially and permanently. His case was that
by removing the door and the windows and by his other acts the tenant has
incurred the liability to be evicted under Section. I I (4) (ii) of the Act. The   F
tenant resisted the application. He pleaded that the landlord did not cooperate
with him in getting electricity and water connections and refused to issue
receipts for the rent he tendered. Therefore, he had not paid the rent. He had
not done anything in the building which materially affected the value or
utility of the building. In fact, what he had done, had only made the building
safe and enhanced its value. He pleaded that he was not liable to be evicted.      G
He also deposited the rent that was in arrears so as to enable him to contest
the proceedings.

      4. A commission was taken out. The Commissioner visited the shop
in the presence of the tenant. The Commissioner noted the relevant features        H
    852                   SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A   and also recorded what the tenant told him in respect of the removal of the
    door and the windows. He noted the lowering of the floor, the erection of
    the pillars and the fixing of the rolling shutter. The landlord examined
    himself as PW 1. He admitted the rent note. He admitted that he had received
    Rs.85,000 as advance. He pleaded that in spite of the statutory notice, the
B   tenant had not paid the rent. He also spoke of the alterations to the building
    brought about by the tenant. The tenant, in his ::vidence tried to justify the
    non payment of rent. He deposed that what he had done in the premises was
    only to facilitate the jewellery trade for which the building was taken on
    rent. He was entitled to do so on the terms of the rent deed. What he had
    done, was only to strengthen the premises. The value of the building has
C   not been permanently or materially diminished. He was not liable to be
    evicted.

          5. The Rent Controller found that the rent note was inadmissible in
    evidence. It was a tenancy from month to month. He found that the tenant
    had defaulted payment of rent. An order for eviction under Section 11 (2)
D   of the Act was liable to be passed. The fact that he had deposited the entire
    rent during the pendency of the proceedings, was relevant only for the
    purpose of Section l 1(2)(c) of the Act. He found that the question of
    materiai ·alteration had to be approached from the angle of the landlord.
    From that angle, it was clear that by the closing of the windows and the door,
E   the amenity to the room had been destroyed by the tenant. The fact that such
    closing of the door and the windows was necessary to secure the jewellery
    of the tenant was not relevant. What had been done amounted to material
    alteration within the meaning of Section l 1(4)(ii) of the Act. The tenant was
    liable to be evicted. He, thus, ordered eviction on both grounds.

F         6. The tenant filed an appeal under Section 18 of the Act. He raised
    a fresh contention. The term of the lease was 15 years. The landlord was
    not entitled to seek eviction before the expiry of that term. The claim for
    eviction was barred by Section 11 (9) of the Act. Since this aspect is not
    agitated before us, it is only necessary to mention that this contention was
G   negatived by the Appellate Authority. It held that since the rent deed was
    unregistered, it was not admissible in evidence. The tenant could not take
    advantage of the term therein. By payment and acceptance of rent, only a
    tenancy from month to month has come into existence. Therefore, the
    application for eviction filed before the expiry of 15 years, was maintainable:

H         7. As regards the claim under Section 11 (2) of the Act, that authority
        ,,


    G. REGHUNATHAN v. K.V. VARGHESE [BALASUBRAMANYAN, J.] 853

reiterated the reasoning of the Rent Controller and found that the tenant had      A
not tendered the rent or established that as a matter of fact, the landlord had
refused to issue a receipt for payment of the same. It relied on a notice issued
by the tenant himself accusing the landlord of not cooperating in his getting
electrical and water connections and taking the stand that he was not bound
to pay the rent. Regarding the claim under Section 11(4) (ii) of the Act, it       B
held that the alterations made by the tenant came within the purviow of that
provision. The order for eviction thereunder was justified. It dismissed the
appeal.

     8. The tenant filed a revision under Section 20 of the Act. The High
Court, re-appraised the relevant materials. It held that the application for       C
eviction was not premature and was maintainable. It further held that the
order for eviction under Section l 1(4)(ii) of the Act was sustainable. There
was no specific discussion on the order for eviction under Section 11(2) of
the Act and the revision was dismissed and the orders for eviction were
confirmed. This is what is challenged here.                                        D
     9. First, the claim under Section IJ(4)(ii) of the Act. The relevant
provision in the Act reads :-

         "11 (4)     A landlord may apply to the Rent Control Court for an
         order directing the tenant to put the landlord in possession of the       E
         building-

              (i)     *****
              (ii) if the tenant uses the building in such a manner as to          p
                   destroy or reduce its value or utility materially and per-
                    manently."

For seeking eviction, the user should destroy or reduce the value or utility
of the building materially and permanently. Even ifthe user leads to some
reduction in the value or utility of the building, eviction cannot be ordered.     G
But, if the value or utility is materially and permanently affected, an order
for eviction could be passed.

     l 0. The Kerala High Court has interpreted this provision in the context
of a number of fact situations. Ahammad Kanna v. Muhammed Haneef,                  H
                                                                          0




    854                   SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A   (1967) K.L.T. 841, held that the demolition of any wall in a building can
    be deemed to be an act of waste which is likely to impair materially the value
    and utility of the building. But that was not enough. The Court had to see
    whether there was sufficient evidence to show that the tenant had committed
    such acts of waste as to impair the value or utility of the building. It was
B   found that the motive for the removal of the wall was for convenience of
    trade. Since it was not shown that any damage to the building was caused
    by the removal of the wall and the boundary was not obliterated, an order
    for eviction under Section I 1(4)(ii) could not be granted. When the tenant
    destroyed a boundary wall, the decision in "Ahammad Kanna" was distin-
    guished and it was held in Ayissabeevi v. Aboobaker, (1971) K.L.T. 273,
C   that the pulling down of a wall might or might not amount to waste, and
    the question will depend upon the purpose for which the wall was pulled
    down. When the purpose was to remove the boundary wall and that resulted
    in the obliteration of the boundary line and the tagging on of the property
    with the adjoining property through the medium of a corridor, it attracted
D   Section I 1(4)(ii) of the Act. Shanmugam v. Rao Saheb, <1988) l K.L.T. 86,
    reiterated that there can be no hard and fast rule that the removal of a wall
    or construction of a door or providing a common verandah should, neces-
    sarily lead to an inference that there was destruction or reduction of the value
    or utility. Such acts of the tenant have to be judged on the facts of each case.
    Mere proof of reduction or even destruction of utility or value was not
E   sufficient and the words "materially and permanently" were important. The
    destruction or reduction of utility or value of the building must be of a
    reasonably substantial magnitude. Prabodhini v. RaJammal, ( 1991) l K.L.J.
    113 decided that the fixing of a gate after removing a portion of the wall,
    could not be taken as an act which destroyed or reduced the value or utility
F   of the building. Nor could it be considered to be an act which materially
    affected the value or utility of the building, that too, permanently. In
    Thankappan v. Reji Xavier, (l 995) 1 K.L.J. 86, it was held that the removal
    of a ceiling attracted Section l 1(4)(ii) of the Act since the value of the
    building was not only reduced but its utility was also materially and per-
G   manently reduced. Mathew v. Gilbert, (1998) 2 K.L.T. 19 held that the
    failure of the tenant to protect the furniture in the building passed on to him
    with the letting of the building, would not attract Section l 1(4)(ii) of the
    Act. In Aboobacker v. Nanu, (2001) 3 K.L.T. 815 it was held that on proof
    of minor destruction or alteration even if it resulted in marginal reduction
    of value or utility, the landlord could not get an order of eviction under
H    Section l 1(4)(ii) of the Act. Seethalakshmi Amma/.v. Nabeesath Beevi,
    G. REGHUNATHANv. K.V. VARGHESE [BALASUBRAMANYAN, J.] 855

(2003) 1 K.L.T. 391 held that the dismantling of the original roof followed       A
by the substitution of a new roof, the replacing of old walls by new walls,
the old flooring by a new flooring and the placing of shutters replacing the
doors after practically demolishing the old building, were acts that attracted
Section 11(4) (ii) of the Act.
                                                                                  B
      11. This Court had considered the scope of the analog0us provision in
sister enactments. The U.P. Cantonments (Controi of Rent and Eviction) Act
was involved in Manmohan Das v. Bishun Das, [1967] I SCR 836. Even
if the alterations did not cause any damage to the premises or did not
substantially diminish its value, the alterations were material alterations. On
that basis alone, the landlord was entitled to evict the tenant. That was in      C
the context of the provision which enabled a landlord to get an order for
eviction, ifthe tenant had, without the permission of the landlord, made any
construction which has materially altered the accommodation. Eviction
could also be ordered even if that construction or alteration was likely to
substantially diminish the value of the building. The difference with the         D
Kerala Act is that the two requirements were disjunctive. It was enough to
~atisfy either one of them. It was clarified that although the expression
"material alteration" was not defined, the question would depend on the
facts of each case. In that case the acts of the tenant were held to amount
to material alterations. In Om Prakash v. Amar Singh, AIR (1987) SC 617,
interpreting the same provision, it was held that the question whether a          E
construction materially altered the accommodation was a mixed question of
fact and law. The dictionary meaning of the expression "materia.ly" and
"alter" were considered. It was held to mean "a substantial change in the
character, form and the structure of the building without destroying its
identity". It had to be seen whether the constructions were substantial in        F
nature and they altered the form, front and structure of the accommodation.
No exhaustive list of constructions that constitute material alteration could
be given. The determination of that question depended on the facts of each
case. On facts, it was held that ~here was no material alteration. It was also
laid down that the construction of a temporary shed in the premises which
could easily be removed did not come within the mischief of the section.          G
Brijendra Nath v. Harsh Wardhan, [1988] 2 SCR 124, held that the con-
struction of a wooden balcony in the showroom did not amount to material
alteration. Replacing of wooden plank on the front door of the building by
a rolling shutter was held to be not an alteration that caused any damage
to the building and that was held not to provide a ground for eviction in         H
    856                    SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A   Arunachalam (died) through L.Rs. and Another v. Thondarperienambi and
    Another, AIR (1992) SC 977. In Vipin Kumar v. Roshan Lal Anand, [1993]
    2 SCC 614, a claim under Section 13(2) (iii) of the East Punjab Urban Rent
    Restriction Act, 1949, it was held that the impairment of the value or utility
    of the building was from the point of the landlord and not of the tenant. It
B   had to be shown that there was impairment of the building due to acts of
    the tenant and, secondly, it had to be shown that the utility or value of the
    building had been materially impaired. The Court went on to say that the
    statute on proof of facts gave discretion to the Court to order eviction. The
    wording of the provision was "if the tenant has committed such acts as are
    likely to impair the value or utility of the building or rented land". The Rent
C   Controller had to independently consider and exercise the discretion vested
    in him keeping in view the proved facts to decree ejectment. It was for the
    landlord to prove such facts which warrant the Controller to order eviction
    in his favour. In Waryam Singh v. Baldev Singh, [2003] 1 SCC 59 construing
    the same provision, it was held that enclosing a verandah by constructing
D   walls and placing a rolling shutter in front, did not justify an inference that
    the value or utility of .the building had been impaired, in the absence of
    evidence led by the landlord to prove that the value or utility had been
    affected. So an order of eviction could not be granted.

          12. From the above, it is clear that the question depends on the facts
E   of the case. The nature of the building, the purpose of the letting, the terms
    of the contract and the nature of the interference with the structure by the
    tenant, are all relevant. The destruction or damage has to be adjudged from
    the stand point of the landlord. Let us look at the facts in the present case.
    The building is 75 years old. According to the tenant, it is 80 years old. The
F   difference is not of any significance. It is the northern room in a building
    consisting of a number of.rooms. It is let out for 15 years for a jewellery
    trade. The term has, of course, not come into effect for want of registration
    of the deed. The door in the western wall has been bricked up. The windows
    on the northern, western and southern walls have also been bricked up.
    Obviously, the bricked up portions can be removed and the doors and
G   windows restored without weakening the structure. But more importantly,
    the level of the floor was lowered, the rafters cut, two concrete pillars erected
    and a rolling shutter fixed. The lowering of the floor and the tampering with
    of the roof, is of some significance. They could lead to impairment of the
    value or utilit~ of the building, materially and permanently. That again has
H   to be judged in the light of the surrounding circumstances. But a rolling



                                                                                        )
    G. REGHUNATHAN v. K.V. VARGHESE [BALASUBRAMANYAN, J.] 857

shutter has been fixed. That provides more security to the premises. The            A
height of the floor can be restored without impairment to the structure. Here,
we find that the landlord has not even pleaded that the alterations made by
the tenant have destroyed or reduced the value or utility of the building
materially and permanently. No doubt, he has stated so in his evidence. But
the tenant has stated that, considering that it was a jewellery business that       B
was being started, these things had to be done. Securing of the premises was
essential. He had given to the landlord Rs. 85,000 as security to be returned,
when he vacated the building. The value of the building, if at all, has only
been enhanced. In this state of the record, it is not possible to infer that the
acts of the tenant have materially and permanently destroyed or reduced the
value or utility of the building. The age of the building cannot be ignored.        c
The purpose of the letting cannot be ignored.

      13. We find that the Authorities below have not approached the ques-
tion from the proper perspective. They have not given sufficient emphasis
to the statutory requirement of the effect being material and permanent. It         D
is "material and permanent". The words are not disjunctive, like in some
other Acts. Here the landlord had not proved the material and permanent
impairment in value or utility. One suspects that the value and utility are
enhanced. The landlord admits that he will get a higher rent if the room is
again .let out. We are, therefore, satisfied that interference is justified. We
hold that the landlord has failed to prove that the acts of the tenant constitute   E
the user of the building in such a manner as to destroy or reduce the value
or utility of the building materially and permanently. We set aside the order
for eviction under Section 11(4) (ii) of the Act.

      14. Now, the claim. under Section 11(2) of the Act. There cannot be           F
any dispute that the tenant had not paid the rent from 5.10.1988 onwards
as claimed by the landlord. He had deposited the rent in the proceeding. If
he has done so, it is relevant only for considering the question whether he
is entitled tnrelief in terms of Section 11 (2)(c) of the Act. The only question
is whether the fact that he had paid a sum of Rs. 85,000 as security, which
the landlord was liable to refund to him at the time of his vacating the room,      G
could be taken note of as an amount available with the landlord for being
adjusted against the rent due. Under Section 8(1) of the Act, the landlord
is not entitled to take any premium or other like sum. Under Section 8(2),
he could receive or stipulate for payment only, an amount not exceeding one
month's rent by way of advance. In both cases, if he has received it, it            H
    858                   SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A   becomes refundable at once. Hence, it would be an amount available with
    him. In Issac Ninan v. State of Kera/a, (1995) 2 KLT 848, the High Court
    has declared that provisions relating to fair rent, that is, Sections 5, 6 and
    8 of the Act, put together, are ultra vires the Constitution of India and are
    void. The questions may have, therefore, to be considered without reference
B   to Section 8 of the Act. In a case where a substantial amount had been
    received as advance at the time of letting, which was liable to be refunded
    without interest on the expiry of the lease, this Court held in Modern Hotel
    v. K. Radhakrishnaiah, [ 1989) 2 SCC 686, that when the amount of arrears
    of rent was smaller than the advance amount held by the landlord on account
    of the tenant, there was no default in payment of rent and the grant of
C   eviction on the ground of arrears of rent was not justified. This was reiterated
    in K. Narasimha Rao v. T.M. Nasimuddin Ahmed, [1996] 3 SCC 45. For the
    purpose of this case, especially when the tenant had pleaded that he had
    deposited the rent even while filing his objection in the Rent Control Court,
    we do not think that it is necessary to pronounce finally on this question.
D   We feel that it is only necessary to clarify that the tenant will have two
    months from today to deposit the rent in arrears till date and the other sums
    in terms·of Section 11(2) (c) of the Act so as to avert the execution of the
    order for eviction on the ground of arrears of rent granted under Section
    11 (2) of the Act.

E        15. The appeal is, thus, allowed by setting aside the order of eviction
    under Section 11 (4 )(ii) of the Act and by granting the tenant time of two
    months from today for averting the order of eviction under Section 11(2)
    of the Act by making the deposit (or by making up the needed deposit) in
    terms of Section l 1(2)(c) of the Act. We make no order as to costs.
F
    B.S.                                                          Appeal allowed.