Rajkamal Kala Mandir Pvt. Ltd., Mahendrakumar Nathmal Lunkad, Surendrakumar Nathmal Lunkad and Arvindkumar Nathmal Lunkad vs Jugalkishor Bansilal Gindodia and Radheyshyam Bansilal Gindodia

V.R. Kingaonkar, J.—This appeal, filed by defendants, is directed against Judgment and decree, rendered by Ad-hoc District Judge-3, Dhule in an appeal (R.C.A. No. 37 of 2006), confirming ejectment decree of trial Court.

Subject matter of the dispute is a cinema theatre called "Rajkamal Talkies" situated at Dhule. Originally, deceased Bansilal Gindodia, a businessman, constructed the cinema theatre and equipped it fully to run business of cinema exhibition. Late V. Shantaram alias Shantaram Vankudre was a noted cine Producer of his times. He was Managing Director of Rajkamal Kalamandir Private Ltd., (defendant No. 1), a company duly registered under the Companies Act, dealing with business of cine production and exhibition. The cinema theatre, with all equipments, furniture and fixtures etc., was let out by Bansilal Gindodia to said V. Shantaram, w.e.f. 1.10.1953 for 15 years. Said V. Shantaram, as a Managing Director of defendant No. 1 (appellant No. 1), executed a lease deed dated 6th October 1953 as per terms of the lease agreement between the parties. The parties agreed that the full fledged cinema theatre, alongwith cine exhibition machinery, equipments, furniture, fixtures, electrical articles etc., as enumerated in the documents, shall be used for cine exhibition by defendant No. 1 -Rajkamal Kala Mandir Pvt.Ltd.(appellant No. 1) on rent of Rs. 600/-p.m. The lease period was to expire by 30th September 1968. The lessee agreed to indemnify the lessor for any damage caused to the cine equipments, furniture, fixtures, etc., during the tenure of the lease period. The lessee further agreed to conduct the cine exhibition business by itself and not to create any third party interest or to assign the business or possession of the cine theatre to anybody else during the relevant period.

The lessee (defendant No. 1 -Rajkamal Kala Mandir Pvt. Ltd.) did not, however, vacate the premises and failed to redeliver possession of the cinema theatre to the lessor/owner. Original owner, Bansilal Gindodia died and his widow, viz., Ratanbai Bansilal Gindodia became owner of the cinema theatre. There took place yet another agreement dated 5th September 1972 between the defendant No. 1 - Rajkamal Kala Mandir Pvt.Ltd. and said Ratanbai Gindodia purportedly of lease/licence for further period of 15 years. The extended lease period was agreed to expire on 30th September 1987. In the meanwhile, by virtue of Will deed executed by said Ratanbai Gindodia on 1.5.1987, the plaintiffs, Jugalkishor Bansilal Gindodia and Radheshyam Bansilal Gindodia, who are brothers inter se became joint owners of the cinema theatre. They issued notice dated 16.8.1990 whereby, they terminated all lease hold rights of the defendant No. 1 (appellant No. 1). They called upon the defendant No. 1 to hand over possession of the cinema theatre with all the machinery, equipments, furniture, fixtures etc.

Briefly stated, the plaintiffs case is that the defendant No. 1 was bound to use the cinema theatre for running of business by itself, yet the business was illegally assigned to the defendant Nos. 2 to 5 who are members of Lunkad family and have no right to possess the cinema theatre. The defendant No. 1 illegally continued to remain in possession of the cinema theatre with the help of other four defendants (Lunkad family members) in spite of the expiry of the lease tenure on 30.9.1987. They did not comply with the notice dated 16.8.1990 and gave false reply to the same. The defendant No. 1 failed to pay rent of Rs. 1,000/-p.m. from August 1990 onwards. The defendant No. 1 committed breach of various terms of the lease agreement dated 5.9.1972.

The plaintiffs further alleged that the cinema theatre is required by them for bona fide and personal needs. They want to run business of cine exhibition in the said premises. Hence, suit for ejectment, mesne profits and injunction was filed.

According to the defendants/appellants, there was no specific condition in the lease deed dated 6.10.1953, which prohibited assignment of the lease hold rights by the defendant No. 1. The defendant No. 1 entered into partnership with the members of Lunkad family on 1.11.1958. They together used to run the cine exhibition business. They denied that afresh agreement was executed regarding terms of the same lease. They contended that by agreement dated 5.9.1972 lease of immovable premises alongwith the fixtures etc. was created. They asserted that the transaction of lease falls under provisions of the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947 (For short, the Bombay Rent Act). They further asserted that deceased Bansilal and his widow -Ratanbai had impliedly accepted the lease hold rights of the partnership between the defendant No. 1 and members of the Lunkad family. They asserted that the rent was accepted for and on behalf of said partnership firm and hence, it cannot be said that there was subletting of the premises or breach of the terms of the lease agreement by the defendant No. 1. They denied that there was default committed in payment of the rent. They further denied that the cine theatre was required by the plaintiffs for bona fide use and occupation. They contended that subsequently, the rent was accepted by the plaintiffs, even after the alleged expiry of the lease period i.e. 30.9.1987 and hence, the plaintiffs have waived right to claim ejectment. On these premises, the defendants sought dismissal of the suit.

The parties went to trial over issues struck at Exh.63 by learned Civil Judge. They adduced oral and documentary evidence in support of the rival contentions. On merits, the trial Court as well as the first appellate Court came to the conclusion that the lease transaction was for business of the cinema theatre and, therefore, it was not covered by the provisions of the Bombay Rent Act. Both the Courts held that the lease was duly terminated as provided u/s 106 of the Transfer of Property Act and hence, the defendants were liable to be ejected. The trial Court decreed the suit. The decree is confirmed by the first appellate Court.

The substantial questions of law formulated for determination in this appeal are set out hereinbelow:

(i) Whether the first appellate Court misconstrued terms of the lease deeds dated 6.10.1953 and 5.9.1972 and whether dominant purpose of the lease transaction was to let out building of the cinema theatre and not to let out business of the cinema theatre ?

(ii) Whether the subsequent lease agreement dated 5.9.1972 was renovation of the contract and licence was created thereby to use and occupy building of the cinema theatre and hence the transaction falls within provisions of Section 5(8) & (8A) of the Bombay Rent Act and hence, the suit could not be tried by the Court of Civil Judge (J.D.) without due notice under provisions of the said Act and proof of relevant issues covered by Section 15 thereof?

Mr. Gangapurwala, learned Advocate for the appellants, would submit that the initial agreement between the defendant No. 1 and deceased Bansilal Gindodia was lease in respect of the premises. He would submit that the dominant purpose was to lease out the premises of the cinema theatre and not to lease out the cine exhibition equipments, furniture, fixtures etc. He pointed out that the rent of Rs. 600/-p.m. was a composite rent. He argued that the terms of subsequent agreement dated 5.9.1972 (Exh.145) would make it amply clear that the licence was created for use of the premises. He pointed out that the cine exhibition licence was obtained by the defendants, they used to pay the entertainment tax, they used to pay the property tax and electricity bills etc. during relevant period. He would submit that if Bansilal Gindodia had taken licence to run the cinema theatre and had assigned the business to the defendant No. 1, then probably the position would have been different but when the main purpose of the lease was to give the premises to the defendant No. 1 for running afresh business, then the transaction would be governed by provisions of Section 5 Sub-clause (8) of the Bombay Rent Act. He would submit that the first appellate Court erred in placing implicit reliance on Dwarka Prasad Vs. Dwarka Das Saraf, . He would submit that the expression "accommodation" as used in U.P.(Temporary) Control of Rent and Eviction Act stands on different footings than the expression "Premises" as used in Section 5(8) and 5 of the Bombay Rent Act. He seeks to rely on "Natraj Studios (P) Ltd. v. Navrang Studios and Anr. AIR 1981 SC 537 and "B.G. Kumaravelu and Anr. v. K.R. Kanakarathnam Chetty and Ors. : [1996]1SCR42 . On the other hand, Mr. Dixit, learned Senior Advocate, supports the impugned Judgment. He would submit that the test to apply is as to what was the dominant purpose of the lease transaction and in the present case, it was only to let out business of the cinema theatre and the use of premises was incidental.

Crux of the problem is what was the dominant intention of parties when the lease transaction was entered into at the time of executing lease dated 6.10.1953 (Exh.144). The terms of the said document need to be first ascertained. For, neither Bansilal Gindodia nor V. Shantaram '' Shantaram Vankudre are alive to spell out such intention. No Managing Director or anyone authorised by the defendant No. 1 - Rajkamal Kala Mandir Pvt. Ltd. came forward to explain the original purpose of entering into the lease transaction. It appears that by resolution dated 24.9.1953, said V. Shantaram was authorised to execute the necessary documents. It was resolved by the then two Managing Directors of the defendant No. 1, viz., V. Shantaram and his wife Mrs.Jayashree to take over the theatre known as Rajkamal Talkies, Dhule from the landlord -Seth Bansilal Uderam (P-28). The resolution purports to show that said theatre with all the equipments viz., machinery, furniture and fixtures etc., was to be taken on lease to conduct the business of exhibition of motion pictures by the Company from 1.10.1953. It bears out from the record that V. Shantaram '' Shantaram Vankudre was running business of cine production and exhibition. He was a noted film Producer and used to exhibit films in the theatres owned by him as well in the theatres obtained on lease for running of the business.

The terms of the lease deed dated 6.10.1953 purport to show that the cinema theatre was full fledged for effective use of cine exhibition business. The composite rent of Rs. 600/- p.m. was agreed to be paid by the defendant No. 1. A list of articles, equipments, machinery is also set out in the document as a part of the lease agreement. The terms of the lease deed would show that cine projector with Duo Sound Master (made in U.S.A.) and other equipments were let out. There is nothing in the document to show that any particular improved cine equipments like sound system, projector, fans or fire extinguishers etc. were not available at the relevant time. The lessee was not required to have any equipment on his own to make the theatre viable for running of the business.

The terms of next lease deed (Exh.145) dated 8.9.1972 purport to show that the same cinema theatre, which was completely equipped and was in running business condition was subject matter of the terms settled into between the defendant No. 2 and Smt. Ratanbai Gindodiya. It is stated in the lease deed (Exh.145) that the previous lease hold rights came to an end due to efflux of time on 30.9.1968. It is also stated that the said lease hold rights were terminated by notice dated 19.8.1968 and, therefore, the new agreement was entered into by the parties on the terms set out therein. An attempt is made to show that there was renovation of the agreement. It appears that the subsequent agreement, in fact, gave continuation to the lease with retrospective effect. The rent was, however, enhanced to Rs. 1,000/- p.m. as per terms of the contract.

Mr. Gangapurwala would submit that after renovation of the agreement of lease, the rights of the tenant, in fact, could not be deemed as determined. He would submit that there was no surrender of the earlier Tenancy Act within the meaning of Section 111 of the Transfer of Property Act. It is contended that the lease was continued for further period of 15 years and the defendants are entitled to fall back on the previous rights as lessees, which accrued by virtue of the lease deed dated 6.10.1953. He would submit that a purposeful attempt is made in subsequent agreement of lease to show that it was a licence created only for running of the cinema business.

Coming to the oral evidence of the parties, it may be gathered that the defendant No. 1 entered into partnership agreement with the defendant Nos. 2 to 4 for running of the cinema exhibition business at Rajkamal Talkies. The lease transaction between the deceased lessor - Bansilal Gindodia and V. Shantaram '' Shantaram Vankudre was outcome of the intention of the defendant No. 1 to obtain the cinema theatre for running of business mainly to exhibit the films produced by it or to exhibit the films of which rights were acquired by it. It does not appear from the record that deceased Bansilal Gindodia held any cine exhibition licence and assigned the same to the defendant No. 1 for running of the theatre due to his difficulties. What transpires from the record is that costly cinema exhibition equipments like projector and imported sound system were fitted in the cinema theatre. The dominant purpose was, therefore, to let out business of the cinema theatre and use of the building was incidental to such a business.

As stated before, none from the defendant No. 1 Company entered the witness box. There is solitary statement of DW-1 - Mahendra Lunkad in support of the case of defendants. He is not a party to either of the lease document. He states that the defendant No. 1 and members of the Lunkad family entered into a partnership deed dated 6.8.1973, which was revived on 14.1.1983, 26.3.1990 and 1.4.1992. Obviously, the defendant No. 1 obtained local help of the members of Lunkad family to run the cinema exhibition business. The testimony of DW-Mahendra reveals that he came in business contact of V. Shantaram since 1963 onwards. He does not know who are the Directors of the defendant No. 1 at present. He admits, unequivocally, that the defendant No. 1 did not authorise him to depose on its behalf. He also admits that the defendant No. 1 - Rajkamal Kala Mandir Pvt.Ltd. owned or had taken on lease various cinema theatres in the State of Maharashtra. He admits further that none of the members of Lunkad family is Director or partner of the defendant No. 1 - Company. He admits that the partnership firm styled as "Rajkamal Talkies" was running business conjointly with M/s Vasant Pictures from 31.12.1972. Said M/s Vasant Pictures retired from the partnership of Rajkamal Talkies in 1972. Thus, it appears that the so-called partnership between the defendant No. 1 and the remaining defendants (Lunkad family members) was co-extensive only uptill the expiry of lease period.

There is no dispute about the fact that after the tenure of renewed lease, which ended on 30.9.1987, the internal partnership between the defendants/appellants also came to an end. The version of DW-Mahendra reveals that from 1.10.1987 till 1990, there was no agreement of partnership between the defendant No. 1 and the other defendants. The categorical admission of DW-Mahendra may be reproduced as follows:

Under agreement of 1972, the defendant No. 1 had taken on lease the running business of Rajkamal Talkies from the plaintiffs. Due to running business I or defendant No. 1 were not required to invest excessive amount is incorrect but it is correct to say that much investment was not needed to be made.

The real intention of the parties was to lease out business of the cinema theatre for exhibition of motion pictures and, particularly, said V. Shantaram intended to dominate the business of cine exhibition in order to further the business prospects of his cine production and expand the activities of M/s. Rajkamal Kala Mandir Pvt. Ltd. and Rajkamal Chitra Mandir. It appears that he owned some theatres at Bombay and other cities and desired to obtain some theatres in the important cities of Maharashtra to facilitate exhibition of his own cinema films or the cinema films of which he had acquired rights of distribution. The dominant purpose of the lease transaction was, therefore, to create lease in respect of running business of the theatre. The mere use of building of the cinema theatre was not palatable to the defendant No. 1. Both the lease transactions were composite. There is nothing on record to show that the lease hold rights of the defendant No. 1 were, in fact, legally terminated by end of 30.9.1968. There is nothing on record to show that the lease hold rights were surrendered and hence, afresh lease was created by virtue of the lease deed dated 8.9.1972 (Exh.145). Indeed, the defendant No. 1 continued to hold over and as such the rights were reaffirmed by virtue of the subsequent lease deed. The fact that the notice of termination dated 16.8.1990 (P-56) was served on the defendant No. 1 is not in dispute. No one concerned with the defendant No. 1 entered the witness box. It appears that after the lease period is over, the defendant No. 1 is no more interested in the business but it is only the members of the Lunkad family who somehow or the other want to continue such business.

The provisions of Section 5(8) and 5(8A) of the Bombay Rent Act may be reproduced as follows:

5(8). "premises" means -

(a) any land not being used for agricultural purposes,

(b) any building or part of a [ building let or given on licence separately ] (other than a farm building) including -

(i) the garden, grounds, garages and out-houses, if any, appurtenant to such building or part of a building,

(ii) any furniture supplied by the landlord for use in such building or part of a building.

(iii) any fittings affixed to such building or part of a building for the more beneficial enjoyment thereof, but does not include a room or other accommodation in a hotel or lodging house;

[(8A) "premises let or given on licence for business" includes, and shall be deemed always to have included, premises let or given on licence for the purpose of practising any profession or carrying on any occupation therein;].

A plain reading of the above provisions would show that provision is similar to that of Sections 3(a) and (n) of the Karnataka Rent Control Act. This can be gathered from relevant observations in paragraph 8 appearing in the Judgment of the Apex Court in B.G. Kumaravelu and Anr." (supra). In the given case, the Apex Court referred to Anant Gadre Vs. Smt. Gomtibai and Others, . That was a case where the lease was of a cinema building with the furniture, fans and other fittings but without projector or the machinery for exhibition of films and, therefore, it was held that the dominant intention was to lease out the building with furniture and fittings and not to let out the building for cinema business. So also, in "B.G. Kumaravelu and Anr." (supra), it was held that the dominant intention was to let out the building for being used as a cinema theatre. The Apex Court held that in the absence of the projectors, amplifiers, screen and the speakers, which are the major parts of the equipments required for exhibition of films, it cannot be said that the lease was of a running cinema business or of a fully equipped running cinema theatre. It was in view of such fact situation that the Apex Court held that the lease transaction was covered by Section 3(a) of the Karnataka Rent Control Act. The fact situation in the case in hand is altogether different. It need not be reiterated that as on the commencement of the lease, the cinema theatre called "Rajkamal Talkies" was fully equipped with cinema projectors, modern sound system and other machinery needed for cine exhibition business. Obviously, the dominant intention was to let out the business and not only the building.

In "Natraj Studios (P) Ltd. v. Navrang Studios and Anr." AIR 1981 S.C. 537 the building of licenced cine studio, which could be given for producing motion picture films therein was held as premises governed by Sections 5(8) and (8A) of the Bombay Rent Act. The Apex Court distinguished case of "Dwarka Prasad v. Dwarka Das Saraf" (supra) on fact situation. The Apex Court did not dilute, however, the test of determining the "dominant purpose of the lease" before reaching conclusion as to whether the lease is governed by the Rent Act or the general Act. It is observed that where the lease was composite and has a plurality of purposes, the decisive test is the dominant purpose of the demise. It appears that by an agreement of "leave and licence" for the use of two studios and other premises shown in list - I annexed to the agreement and separate list to use machineries and equipments mentioned in list - II annexed to the agreement, the licence was granted by the licensor. The Apex Court observed:

If the definitions of "premises" let or given on licence for business", "premises" and "licence" are read together it will at once become clear that even a building so constructed or designed as to be capable of being used for running a certain business only is "premises" within the meaning of Section 5(8) and Section 5 and does not cease to be premises merely because the building is capable of being used for the particular business only or merely because machinery or equipment must necessarily go along with the building if it is to be used for the business. If "premises" did not, by definition include a building given on licence but meant only a building which was let, it could perhaps be argued with great force that the expression premises would not take within its stride a business let as a business, but the situation is changed by the inclusion of any building given on licence by the deeming of a licensee as a tenant u/s 15A of the Act. A licensee is not really a tenant but is a person deemed to be a tenant because of Section 15A of the Act. A building in which a person is licensed to run a business is "premises" within the meaning of Sections 5(8) and 5(8A), to which Part II of the Act is made applicable by Section 6(1) notwithstanding the fact that the building is not let as such".

True, the Apex Court analysed provisions of Section 5 and 5(8A) of the Bombay Rent Act while reaching conclusion that building licenced to run business is "premises" within Sections 5(8) and 5(8A) of the Bombay Rent Act. That was a case of cine studio, which was having licence to use the building for producing motion picture films therein. Ordinarily, in case of cine studio, the structures and open land play major role whereas, the fixtures and machinery mostly are rather of subsidiary purpose. It is of common knowledge that a spacious building and open space is required for film shooting purposes. Normally, cine production business cannot be cribbed in a small hall like that of a theatre. The importance is, therefore, to the building and open space available for production of motion pictures. The premises require appropriate arrangements for fixing of sets for variety of situations appearing in the proposed motion picture. The case of "Natraj Studios (P) Ltd." is that of a "leave and licence" granted for use of two cinema studios. The case in hand, however, is that of lease in respect of cinema theatre. The dominant purpose of the leases would make the distinction and hence, with due respects, it is difficult to apply the ratio in "Natraj Studios (P) Ltd." to the facts of the present case.

In "Harisingh v. Ratanlal" 1969 Jab. LJ 639 a Division Bench of Madhya Pradesh High Court considered somewhat identical fact situation. The learned Judges held that a composite lease of land and building together with fixtures, fittings, etc., cannot be split, because so to split up such a lease would be to destroy it altogether. The learned Judges of the Division bench held that when the building let out was a fully equipped cinema theatre, which could be used only for running a cinema business of exhibiting films, it was mainly lease of business premises. The Division Bench relied on Uttamchand Vs. S.M. Lalwani, . The Apex Court in case of "Uttamchand" (supra) held that the Court must determine the character of the lease and the question in each case would be, what is the dominant part of the demise and what is the purpose for which the building was constructed and let out; and; having regard to the dominant purpose of the lease in that case, "the fitting or the machinery could not", in their Lordships "words" be regarded to be fittings which had been affixed for the more beneficial enjoyment of the building "but held that the fixtures were the primary object which that lease intended to cover" and the building in which they were located came in incidentally.

The use of cinema theatre as a building with machinery required for exhibition of films and for better exhibition thereof, with help of sound system, acoustics etc., is essential. The provision of constructed premises is only incidental in such a case. Consequently, I have no hesitation in holding that the dominant purpose of lease being that of allowing use of the cine exhibition machinery, fittings, sound system etc., the use of the building was incidental, the premises would fall outside the purview of Section 5(8) and Section 5(8A) of the Bombay Rent Act. The lease was renewed in 1972 whereas, Section 5(8A) came into force at later point of time in 1978. Moreover, it is not a case of "licence", which would be deemed as lease for the purpose of the relevant provisions. The inclusive definition of Section 5 of the Bombay Rent Act was inserted by Maharashtra Act No. 17 of 1973 and that too was after the subsequent renewal of the lease in question. The definition of expression "premises" as used in Section 5(8)(b) reveals that it would cover any building let out along with furniture supplied by the landlord for use of the building or part of the building. It will also cover the building or part thereof with any fittings affixed to such building for the more beneficial enjoyment thereof. The definition itself reveals that the ancillary purpose of fittings if is to facilitate more beneficial enjoyment of the building, then Section 5(8) of the Bombay Rent Act is attracted. However, when the equipments and costly machinery affixed to the building is the main purpose and the building is constructed for facilitation of the use thereof, then it may not be covered by Sub-clause (8) of Section 5 of the Bombay Rent Act. The same is fact situation obtained in the case before me.

It is argued by learned Advocate for the appellants that acceptance of rent by the landlord after service of the notice would amount to waiver of the intention to terminate the tenancy. I do not agree. In Sarup Singh Gupta Vs. S. Jagdish Singh and Others, , the Apex Court held that mere acceptance of rent by the landlord is not determative to reach conclusion that right of eviction, which accrued due to termination of the tenancy, is intended to be waived by the landlord. The appellants are not entitled to any legal protection. The tenancy rights are duly terminated in accordance with provisions of the Transfer of Property Act. In this view of the matter, I do not find any substance in the appeal. The substantial questions of law formulated hereinabove are, therefore, answered in the negative.

In the result, the appeal is dismissed with costs.