Law Web: Whether it is permissible for landlord to waive change of user from residential to commercial use?

The only question which has to be determined, therefore, is whether the tenant is entitled to urge that there is a waiver by the previous landlord of the breach committed by the tenant, inasmuch as for a period of six years from 1960 to 1967, the landlord has accepted rent without any protest and whether this would mean that breach has been waived and, according to the learned counsel, the present plaintiffs cannot take advantage of that breach since it has already been waived by the previous landlord. This argument was founded on a decision of the Punjab High Court in M/s. New Garage Ltd. v. Khuswant Singh & another MANU/PH/0024/1952 : AIR (1952 P&H. 82, where dealing with provisions of section 9(1)(b) of the Delhi & Ajmer Merwara Rent Control Act, the Division Bench took the view that the effect of section 9(1)(b) of that Act was that if it was proved that by consent of the landlord premises have been used for purposes other than that for which they were let, a landlord will not have the right of ejectment. It was held that the consent may be either express or implied and, therefore, section 9(1)(b) would be defeated by waiver on the part of the landlord if it is proved that by his past conduct he had consented to a particular breach of the covenant with regard to user of the premises. Section 9(1)(b) of that Act provided as follows:--

9. (1) Notwithstanding anything contained in any contract, no Court shall pass any decree in favour of a landlord, or make any order, in favour of a landlord whether in execution of a decree or otherwise, evicting any tenant, whether or not the period of the tenancy has terminated, unless it is satisfied either.

* * * *

(b) that the tenant without the consent of the landlord, has whether before or after the commencement of this Act,

(i) used the premises for a purposes other than that for which they were let, or

Now, while it may not be possible to quarrel with the proposition-laid down in the Punjab decision, the ratio of that decision cannot be applied with full force in the present case in view of the provisions of section 25 of the Bombay Rent Act on which reliance has been placed by Shri Gumaste appearing on behalf of the landlord. Section 25 of the Bombay Rent Act is as follows :--

25. (1) A landlord shall not use or permit to be used for a nonresidential purpose any premises which on the date of the coming into operation of this Act were used for a residential purpose.

(2) Any landlord who contravenes the provisions of sub-section (i) shall, on conviction, be punishable with imprisonment for a term which may extend to three months or with fine or with both.

Shri Abhyankar has contended that section 25 is merely a penal provision and will not come in the way of the defendant if he wants to prove a waiver by the landlord. Now, it is clear on the reading of provisions of section 25 that it is in two parts. The first part is prohibitory in character and operates as an injunction against the landlord and prevents him from using or permitting to be used premises which are used for a residential purpose on the date of the coming into operation of the Rent Act to be used for a non-residential purpose. The object appears to be that the accommodation which is available for residential purposes should not be allowed to be reduced by unilateral action on the part of the landlord either by using it or by allowing it to be used for a non-residential purpose. Sub-section (2) of section 25 prescribes the penalty for a contravention of sub-section (1). Now, while it may not be disputed that a right of termination of lease flowing out of a breach or the lease by the tenant can be waived by the landlord if he does not want to exercise this right. In so far as the provisions of the Rent Act are concerned, the right of the landlord to allow the premises to be used for any other purpose in a case where the premises were originally taken for residential purposes is now controlled or indeed taken away by the provisions, of section 25(1). Any waiver which is bound ultimately to result in either temporary or permanent change in the user of residential premises for nonresidential purposes is bound to defeat the provisions of section 25 (1) which has clearly been enacted on the ground of public policy. Any contract between the landlord and the tenant whether expressly made or inferred by implied consent would, therefore, be only impermissible in a case where residential premises are sought to be used or allowed to be used for non-residential purposes in view of the imperative character of section 25 (1). In such a case, there is no question of any waiver because if a landlord cannot legally do anything expressly, the same result could not be brought about by implication. Thus, there is clear indication in section 25 (1) that a tenant cannot be permitted to use residential accommodation for non-residential purpose either by express permission or by permission granted impliedly and in such a case, it is not open, therefore, to the tenant to contend that the landlord has waived the breach so as to defeat his right under section 13 (1) (a) of the Bombay Rent Act, It is not, therefore, possible to accept the contention that the landlord has waived the breach.

11. It was then contended that the house is of 30 khans and only accommodation to the extent of 10 khans is being utilised for non-residential purposes and, therefore, the dominant use of the premises continued to be for residential purposes and consequently section 25 (1) will not be affected. Having regard to the nature of the provisions of section 25 (1) and its object, in my view, the question of either dominant use or ancillary use of the premises becomes wholly irrelevant. Even otherwise so far as the present case is concerned, mere extent of the accommodation will not be very relevant.

IN THE HIGH COURT OF BOMBAY

Spl. C.A. No. 561 of 1977

Decided On: 21.08.1981

Bansilal Rampratap Rathi Vs.Suratsing Chandanmal and others

Hon'ble Judges/Coram:

M.N. Chandurkar, J.

1. The only question which really arises for decision in this petition filed by the tenant is whether the lower appellate Court was right (sic) making a decree for eviction in respect of the suit premises on the finding that the tenant had brought about a change in the user of the premises, which (sic) originally taken only for the purposes of residence. I am not (sic) with the landlord's case that the premises were needed bona fide for (sic) use because on that issue, both the Courts below have found against (sic) landlord.

2. The relevant facts may now be stated: The house in question originally belonged to one Surajbai and it was occupied by the petitioner (sic) residence and he executed a rent-note dated 20th July, 1946. The house (sic) to be auctioned in some litigation against Surajbai and plaintiff Na. 1 (sic) purchased the said house in January 1967. The tenant fell in arrears of (sic) and plaintiff No. 1 then filed Civil Suit No. 229 of 1968 for arrears of rent. This suit came to be decreed on 6th September, 1975 and a decree for Rs. (sic) plus costs was made. The trial Court had directed that the landlord was permitted to increase the amount of rent to Rs. 250 per year upto 5th August

3. During the pendency of the appeal, plaintiff No. 1 filed a suit claiming possession on several grounds, i.e., bona fide requirement of or (sic) occupation, arrears of rent, change of user and damage caused to the baited by the tenant. During the pendency of the suit, the house in question transferred by plaintiff No. 1 to plaintiff No. 2 who came' to be (sic) party to the suit on 29th September, 1971. Possession was (sic) ground that there was a change in the user of the premises because (sic) suit premises were taken for residential purposes the tenant had changed the user of the suit premises by starting a grocery shop in those premises. The grocery shop is said to have been started sometimes in the year 1960.

4. The tenant, inter alia, denied that he was in arrears. He pleaded that the premises were not taken only for residence but also for establishing a shop therein since the beginning. The plea of consent and waiver was raised and it was stated that the original landlord had consented to the premises being used for business purposes and, in any case, the previous owner not having objected to the use of the premises for shop purposes and having accepted rent, the previous landlord was deemed to have waived the change of user with the result that the plaintiffs were not entitled to rely upon the alleged change of user. A defence is taken that the premises were primarily being used for residence, i.e., the dominant use of the premises was for residence and not for a shop because the shop has been established only in a small portion of the premises.

5. The trial Court held in favour of the tenant that he was not a wilful defaulter and that the landlord had failed to prove that the premises were required for bona fide personal use in a reasonable manner and further that there was no evidence to show that the defendant had damaged the suit property in any manner. The trial Court, however, holding that the defendant had committed a breach by establishing a shop in a portion of the suit premises despite the fact that if was originally taken for residential purposes, a decree for eviction came to be passed only in respect of a portion of the house to the extent of 7 khans.

6. Both the plaintiffs and the defendant filed appeals against the decree passed by the trial Court before the appellate Court. It was contended in appeal that right from the time the premises were taken on lease, the defendant was running a cotton and silk yarn shop in the suit premises till it was sold by Court auction and purchased by plaintiff No. 1 and it was only thereafter that the grocery shop was started. The appellate Court found that there was no documentary evidence on record to indicate that cotton and silk yarn shop was in fact run by him in the suit premises. The appellate Court found that it was not permissible for the defendant to allege and prove that the shop was taken for running a silk and cotton yarn shop also. The appellate Court, therefore, negatived the contention that a shop of cotton and silk yarn was run by the defendant with the consent of the former owner. The appellate Court also negatived the contention that any oral agreement had taken place between him and the original landlord to the effect that the portion of 7 khans would be used for running a shop and remaining portion for residence on payment of yearly rent of Rs. 250 because this was an improvement on the original story. The grocery shop was found to have been started in the year 1960 but the appellate Court found that there was no evidence of any acquiescence by the original landlord. The learned Judge also found that when the premises taken for residence, the defendant could not have used it for a shop and he had, therefore, contravened the provisions of section 13(1)(a) of the Bombay Rent Act and section 108(o) of the Transfer of Property Act. The appellate Court upheld the validity of the notice. With regard to the arrears of rent, the learned Judge found that (sic) amount was due from the defendant to the plaintiffs towards arrears of that and the learned Judge referred to the payments made from time to the between 27th June 1970 to 18th October, 1976. As already pointed out requirement for personal use was negatived. The appellate Court found that the trial Court had no jurisdiction to divide the premises and pass a (sic) in respect of a part of them and consequently the decree for eviction from the entire premises was passed. It is this decree which has now been (sic) by the tenant in this writ petition.

7. The first contention raised before me by the learned counsel for the defendant that the plaintiff No. 2 could not take advantage of the (sic) committed by the tenant during the time when he was not the owner of the property need not be discussed now in detail in view of a Division (sic) decision of this Court in Radhabai Bapurao Shelar v. Trimbak (sic) Shirole and others Special Civil Application No. 3391 of 1975 decided on 5-8-1981 (Now (sic) in 1981 Mh. LJ 967, in which the Division Bench has taken the view that the right of recovery of possession under sub-sections (a) and (b) of section (sic) of the Act can be exercised by the successor in interest either by operation of law or by act of parties of the original landlord and such right is not restricted only to the person who is the landlord on the date on which the breach took place.

8. The second contention that the change of user was not destruction or permanently injurious to the property and could not, therefore, be (sic) of by the landlords for the purpose of evicting the petitioner has also to be negatived in view of the decision of the Division Bench in Bright Brothers (Pvt.) Ltd. and Company v. Venkatlal G. Pittie and others MANU/MH/0440/1979 : 1979 Mh. LJ 894, in which the Division Bench has taken the view that the mere act of change of purpose of the user even if it does not happen to be destructive or permanently (sic) to the leased property would amount to breach of clause (o) of section (sic), Transfer of Property Act and actionable under section 13(1)(a) of the Bombay Rent Act.

9. The learned counsel for the defendant then contended that if at all any breach has taken place, it has not taken place after the Bombay Rent Act has come into force and it has taken place in 1943 and, therefore, the provisions of section 13(1)(a) could not be availed of by the landlord. Reliance was placed on the wording of clause 13(1)(a) which entitles the landlord to recover possession of the premises if the Court is satisfied "that the tenant has committed any act contrary to the provisions of clause (o) of section 108 of the Transfer of Property Act." Emphasis was laid on the use of the words "tenant has committed" and, according to the learned counsel, this indicated that the breach has to take place after the Act has come into force. (sic) this argument presupposes that the cotton and the silk yarn shop was (sic) in the premises in 1943,and that was the basis of the contention that the breach having taken place in 1943 itself, there was no question of the applicability of section 13(1)(a). The appellate Court has found as a fact that the lease was taken for residential purposes and there was no evidence to show that any cotton or silk yarn shop was already started there in 1948 and then in 1960, the business was changed to a grocery shop. The finding of fact recorded by the appellate Court is that, for the first time, the change of user took place in 1960 when the grocery shop was established. Consequently, the argument that no change of user has taken place after the Act has come into force will have no substance. We must proceed in this petition on the footing that the change of user has taken place in 1960. Realising this difficulty, it has been vehemently argued on behalf of the defendant by Shri Abhyankar that there was a waiver by the previous landlord of the change in the user. It is also argued that when the learned Judge recorded a finding at the end of paragraph 15 that the documents, Exh. 122 to Exh. 126, did not support the plea of the defendant that a shop of cotton and silk yarn of the defendant in the suit premises was run with the consent of the former owner, this finding must be so read as to mean that there was originally a shop of cotton and silk yarn but that it was not run with the consent of the owner. The manner in which the learned counsel wants to read this finding is not justified by the other parts of the judgment of the learned Judge. As a matter of fact, the learned Judge has later on discussed the evidence to show that the defendant has failed to prove that he was carrying on any business of cotton or silk yarn at any time. So far as the question of consent is concerned, again that would become a finding of fact and is against the defendant.

10. The only question which has to be determined, therefore, is whether the tenant is entitled to urge that there is a waiver by the previous landlord of the breach committed by the tenant, inasmuch as for a period of six years from 1960 to 1967, the landlord has accepted rent without any protest and whether this would mean that breach has been waived and, according to the learned counsel, the present plaintiffs cannot take advantage of that breach since it has already been waived by the previous landlord. This argument was founded on a decision of the Punjab High Court in M/s. New Garage Ltd. v. Khuswant Singh & another MANU/PH/0024/1952 : AIR (1952 P&H. 82, where dealing with provisions of section 9(1)(b) of the Delhi & Ajmer Merwara Rent Control Act, the Division Bench took the view that the effect of section 9(1)(b) of that Act was that if it was proved that by consent of the landlord premises have been used for purposes other than that for which they were let, a landlord will not have the right of ejectment. It was held that the consent may be either express or implied and, therefore, section 9(1)(b) would be defeated by waiver on the part of the landlord if it is proved that by his past conduct he had consented to a particular breach of the covenant with regard to user of the premises. Section 9(1)(b) of that Act provided as follows:--

* * * *

(b) that the tenant without the consent of the landlord, has whether before or after the commencement of this Act,

(i) used the premises for a purposes other than that for which they were let, or

Now, while it may not be possible to quarrel with the proposition-laid down in the Punjab decision, the ratio of that decision cannot be applied with full force in the present case in view of the provisions of section 25 of the Bombay Rent Act on which reliance has been placed by Shri Gumaste appearing on behalf of the landlord. Section 25 of the Bombay Rent Act is as follows :--

25. (1) A landlord shall not use or permit to be used for a nonresidential purpose any premises which on the date of the coming into operation of this Act were used for a residential purpose.

(2) Any landlord who contravenes the provisions of sub-section (i) shall, on conviction, be punishable with imprisonment for a term which may extend to three months or with fine or with both.

12. Having regard to this finding recorded above, it is really not necessary to go into the argument advanced on behalf of the petitioner that the tenant was in arrears of rent and was not, therefore, entitled to the benefit of section 12 (3)(b) of the Bombay Rent Act However, for the sake of completeness of the judgment, I shall deal with that argument also. The argument of Shri Gumaste was that rent was payable monthly because the tenancy was a monthly tenancy and the schedule reproduced by the learned appellate Judge at page 47 of the judgment would clearly indicate that lump sums have been paid at a distance of almost one year each. Therefore, the argument was that since rent was not paid as and when it becomes due, the tenant was liable to be evicted. Reliance was placed by the learned counsel on the decision of the Supreme Court in Mranmalini B. Shah and another v. Bapalal Mohanlal Shah MANU/SC/0384/1978 : AIR 1980 SC 954, in which the Supreme Court has held that for the purposes of section 12 (3) (b) when it contemplates payment of rent and permitted increases to be made regularly during the pendency of suit or appeal in the case of a monthly tenancy, a Court has no discretion to treat payments made at irregular intervals as sufficient compliance with clause (b).

13. Now, the argument of the learned counsel for the landlord proceeds on the footing that in the case of a monthly tenancy, rent must be payable monthly and that, in no circumstances it can be paid on yearly basis. There is no reason in law to prevent the parties to arrive at an arrangement proceeding even in the case of a monthly tenancy for rent being paid yearly and that does not make it a yearly tenancy. The order of the civil Court in the earlier suit in this case shows that rent was fixed at Rs. 250 per year along with the permitted increases and that is how rent has been paid from year to year during the pendency of the suit either at Rs. 276 per year or at half-yearly intervals at Rs. 138. There is, therefore, no substance in the contention that the tenant was not entitled to the benefit of section 12 (3)(b) on the ground that the rent was paid irregularly. In any case, no question now of section 12(3) (b) arises in view of the earlier finding on the change of user. Consequently, in the view which I have taken, this petition fails and is dismissed. Rule discharged with costs.

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Whether it is permissible for landlord to waive change of user from residential to commercial use?

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