V. Ramalingam vs S.C.S. Palaniappan

S. Mohan, J.—The facts leading to the second appeal which has been preferred by the defendant are as under:

Vacant site lying within Salem Town limits was leased out in favour of the defendant in 1959 under an oral agreement for the purpose of the

lessee''s motor workshop. The original period of lease expired on 31st December, 1963, and thereafter, the defendant is holding over. Inspite of

the plaintiff''s protests, the defendant has put up the superstructures in order that he could permanently squat on the property. On 4th May, 1970,

the plaintiff sent a notice to the appellant herein by which he terminated the monthly lease and requested the tenant to surrender possession. In

defence it was contended that the lease is not terminable as long as the defendant was paying rent and that was the basic term at the

commencement of lease. During the various constructions, the plaintiff stood by. The defendant is entitled to purchase the suit site under the

provisions of the City Tenants'' Protection Act. The lease was one for manufacturing purpose and therefore, there has not been proper notice u/s

106 of the Transfer of Property Act. In any event the tenant is entitled to the value of improvements before possession could be ordered.

The learned Additional District Munsif of Salem on an elaborate consideration of the oral and documentary evidence, came to the conclusion

that the defendant was not entitled to the benefits of the City Tenants'' Projection Act and that there has been a proper notice of termination of

tenancy and consequently, decreed the suit. Thereupon A.S. No. 23 of 1973 was preferred to the learned Subordinate Judge Salem who also

concurred with the findings of the trial Court and dismissed the appeal, however, subject to the condition that the defendant will hand over

possession of the suit property with such improvements for which the defendant would be paid compensation before effecting delivery. It was also

said that the defendant would be at liberty to remove such fixtures and superstructures as would be declared as not amounting to improvements. It

is against this concurrent judgments, this second appeal has been preferred.

In so far as the above direction has been given, memorandum of cross-objections has been preferred by the plaintiff contending that there will

be no liability on the part of the plaintiff to pay for the improvements.

5 Mr. T.R. Ramachandran, learned Counsel for the appellant, draws my attention to the judgment of the Supreme Court reported in Allenbury

Engineers Pvt. Ltd. Vs. Ramkrishna Dalmia and Others, . and also Alagarswami Kone Vs. T.J. Andhoni, and submits that since the object of the

lease is for a manufacturing purpose, there has not been a proper notice u/s 10 of the Transfer of Property Act. As against this, the learned

Counsel for the respondent Mr. T.S. Subramaniam would submit that there, is absolutely no manufacturing. The manufacturing of silencer mufflers

is only incidental to the repair work and the very decision of the Supreme Court relied on by the learned Counsel would support his plea that the

manufacturing is incidental and the primary and predominant purpose of the lease is not manufacturing. As regards the cross-objection, the learned

Counsel for the cross-objector Mr. Subramaniam contends that having regard to the dicta laid down in Periaswami Pillai and Others Vs. Sri

Arunjadeswaraswami Temple at Tirupanandal, and Sree Siddhi Budhi Vinayakagar Sree Sundareswarar Devastanam Vs. S.V. Marimuthu, , this is

not a case in which the plaintiff would be liable to pay compensation. As a matter of fact, at every point of time, before the superstructure was put

up it was specifically protested against. In fact, in the evidence of D.W. 1 there is a clear admission that both at the time of construction and at the

time of submitting the plan, there were protests by the plaintiff. As against this, it is pointed out by the learned Counsel for the appellant who

opposes the memorandum of cross-objections that under Exhibit B-1. it has been clearly agreed that he would be paid compensation for any

superstructure that has been put up.

Section 106 of the Transfer of Property Act reads thus:

In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be

deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months'' notice expiring with the end of a year of

the tenancy; and a lease of Immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part

of either lessor or lessee, by fifteen days'' notice expiring with the end of a month of the tenancy.

Every notice under this section must be in writing signed by or on behalf of the person giving it, and either be sent by post to the party who is

intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants, at his residence, or (if such

tender or delivery is not practicable) affixed to a conspicuous part of the property.

Therefore, if the lease is for manufacturing purpose, there must be a six months'' notice. In the instant case, notice was given on 4th May, 1970

giving time to vacate till 30th June, 1970 as evidenced by Exhibit A-3. If the lease is for manufacturing purposes, then the notice Exhibit A-3 is

certainly not in accordance with Section 106 of the Transfer of Property Act. The concurrent findings of the Courts below in this case are that no

doubt, the appellant was manufacturing silencer mufflers but he was not selling them on commercial scale and the manufacturing was only incidental

for carrying out the repairs of the motor engine. What the lower appellate Court gays on this aspect can be conveniently extracted here for a

proper appreciation of the point in dispute. In paragraph 8 of the judgment of the lower appellate Court it is stated thus:

Accepting the production of silencer mufflers as true, can it by itself prove that such production or manufacture is an agreed purpose and fur her a

dominant purpose of the lease? The defendant has nowhere stated that he produced this article on a commercial scale and sold them to consumers

other than his clients for repairs. This article is a small accessory needed for carrying out repairs of motor engines. It must be deemed that

defendant made silencer mufflers as an ancillary job and used them in his work of motor repair which was the dominant or primary trade carried on

by him and agreed to by the lessor. Inasmuch as the lease is oral, the defendant has a heavy onus to show that the lessor agreed categorically to

the change of his business or enlargement of his trade. The volume of manufacture of Silencer Mufflers is so small that it cannot be treated as a new

or an independent job unconnected with the motor workshop service. Repairs may involve replace, merit of some minor parts which the repairer

may get from other sources. To avoid purchase of minor components, improve efficiency and increase profit, the defendant might have started

making of silencer mufflers by himself. It is admitted case that the tenant went into possession for the purpose of carrying on the trade of motor

workshop and not anything else. Whatever incidental manufacture was made by the tenant shall be interpreted as subordinate work and not as an

independent trade. I hold that manufacture of silencer mufflers is not an additional or independent purpose to which the scope of lease was

enlarged with the approval of the lessor.

Under similar circumstances their Lordships of the Supreme Court in Allenbury Engineers Pvt. Ltd. Vs. Ramkrishna Dalmia and Others, , stated

thus:

Even if the evidence of Jain were accepted in toto, and we were to find that some spare parts were being manufactured for repairing or

reconditioning the vehicles, the dominant purpose of the lease would still have to be regarded as one for storage and resale of the vehicles and not

for manufacturing purposes. Manufacturing of spare parts would then be merely incidental to the main purpose of disposal of these vehicles as

without repairing or reconditioning them, such disposal could hardly have been possible. In our opinion, the appellants tailed to establish that the

dominant purpose of the lease was manufacturing purpose. In that view, the appellants could. not have challenged the legality of the notice.

This ruling squarely applies to the facts of this case. If the predominant purpose of the lease is not manufacturing purpose and the manufacturing of

silencer mufflers was only incidental to carry out the repairs, then there is undoubtedly a proper notice.

Turning to the liability of the plaintiff to pay compensation, in Sundareswarar Deoasthanam v. Marimuthu ILR (1963) Mad. 1054 : ILR 1963

Mad. 369, a Division Bench of this Uourt held thus:

We may in passing point out the un-soundness of the latter view. Once the Madras City Tenants Protection Act is held not to apply, we cannot

case how the landlord can be compelled to pay compensation. Both under the common law as well as under the transfer of Property Act, the right

of a tenant who had put up a super-structure on a lease-hold land which was taken on a terminable lease, will be only to remove the superstructure

at the time of delivery of possession on the termination of the lease. There would be no right to compel the landlord unless the latter agrees to do

so to pay compensation for unwanted superstructure. Secondly the landlord who had obtained possession of the land as in the present case cannot

be compelled to surrender back the land because the tenant had failed to remove the superstructure at the time he vacated the property.

If it is proved that the landlord had appropriated the materials which formed part of the superstructure the tenant can only have the value thereof

assessed and recover the same.

Similar is the position here. It was found by the Courts below that the appellant is not entitled to the benefits of the City Tenant''s Protection Act in

which case the direction given by the lower appellate Court in paragraph 12 of its judgment is incorrect. I may at this stage conveniently refer to the

decision reported in K.M.S. Lakshmana Aiyar Vs. Additional Income Tax Officer, Special Circle, Madras, , in which a learned single Judge of this

Court at page 96 held thus:

With regard to the memorandum of cross-objections it is clear that the lower appellate Court has committed a mistake in relying upon the decision

in Alagarswami Kone Vs. T.J. Andhoni, . Having regard to the terms of the case deed in that case, that decision has no application to the instant

case in that case the lease deed contained a provision that on the termination of the lease when the lessor terminated his possession, the lessee

would be entitled to the cost of the construction of improvement which was effected on the property with the result it could be said that when the

lessee effected improvements, he did them in good faith and on the presumption that he would be entitled Jo the value thereof. The principle will

have no application to a case in which the lease deed contains a contrary provision Exhibit A-4 contains a clear covenant that on the termination of

the lease the lessee should hand over possession of the property along with the building, trees etc. without any claim for compensation. The first

defendant cannot blow hot and cold. If he relies upon the lease deed, Exhibit A-4 he is not entitled to get compensation. If the lease deed becomes

inadmissible for want of registration, u/s 51 it is clear that a lessee would not be entitled to compensation in respect of any improvements effected

on the property demised. Mr. Veakatarama Iyer drew my attention to the decision of the Privy Council in AIR 1931 79 (Privy Council) and the

observations therein at page 546 to the effect that if a lessee erects any building not in a mistaken belief of his tights in regard to the land but in

assertion of rights which he correctly believes to be his but which ultimately turn to be unfounded in law, he cannot claim compensation. From this it

will be clear that the first defendant is not entitled to any claim for compensation. The result is the Memorandum of cross objections is allowed.

This decision is equally applicable to the facts of this case In fact, in the evidence of D.W. 1 in more than one place it is found that at a time when

the wall was raised, notice was issued by the plaintiff objecting to the raising of the wall and then again when the defendant applied for licence, that

was objected to by the plaintiff. So, it cannot be said that the plaintiff had acquiesced in this case and as a matter of fact there was positive

dissuation from putting up any superstructure. Merely because under Exhibit B-1, in order to purchase peace, he stated that he would be prepared

to pay compensation that does not mean that the plaintiff is legally liable whatever may be the moral liability.

In the result, the second appeal will stand dismissed. The memorandum of cross-objections will stand allowed. The parties will bear their costs

in the second appeal as well as in the memorandum of cross-objections. Time to deliver vacant possession till 31st December, 1978. I make it

clear that the executing Court shall not grant any further time. This grant of time upto 31st December, 1978 is on the specific condition that the

appellant continues to pay every month a sum of Rs. 40 on or before 10th of every succeeding English calendar months without default. Even if a

single default is committed, the time granted upto 31st December, 1978 will cease.

Since the parties are not agreed about the actual rent I have fixed the liability only at Rs. 40 p.m. having regard to the fact that originally a sum of

Rs. 40 per month was fixed. This will not in any way prejudice the rights of the plaintiff respondent to claim such damages for use and occupation

or mesne profits regarding which I am told that there are suits pending.