# 6 S.C.R. 1101 M/S SHAHA RATANSI KHIMJI & SONS v. PROPOSED KUMBHAR SONS HOTEL P. LTD. & ORS

- **Citation:** [2014] 6 S.C.R. 1101
- **Court:** Supreme Court of India
- **Decided:** 2014-07-10
- **Case number:** Civil Appeal No.127 of 2007
- **Bench:** R.M.Lodha, Sudhansu Jyoti Mukhopadhaya, Dipak Misra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/6-s-c-r-1101-m-s-shaha-ratansi-khimji-sons-v-proposed-kumbhar-sons-hotel-p-ltd-30021
- **Pages:** 27

## Headnote

Transfer of Property Act, 1882: ss.105, 108, 111 - Held:
A lease of immovable .property is a transfer of right to enjoy C
such property in -consideration of price paid as per s. 105 of
the T.P. Act - By way of lease, a right and interest is creat~d
which stands transferred in favour of the lessee - The
immovable property, thereafter, only can be reverted back on
detennination of such right and interest in accordance with the
D
provisions of the T.R. Act - Therefore, once the right of lease
is transferred in favour of the lessee, the des~ruction of a
house/building constructed on the lease property does not
detennine the tenancy rights of occupant which is incidental
to the contract of the lease which continues to exist between
E
the parties - In the instant case, respondent purchased the
lessor's interest - Lease continued even thereafter and did not
extinguish - The lease was subsisting when the shares of the
land were purchased by the respondent - But the interest of
the lessee was not purchased by the respondent - Demolition
F
and destruction of the tenanted premises - Tenancy of the
appellant cannot be said. to have been determined
consequent upon demolition of the tenanted premises - High
Court wrongly held that tenancy rights of appellant had lapsed
- However, taking into considef"{ltion the fact that the appellant
G
has not been in possession of the suit property since long,
restoration of possession of suit property to the appellant is
not directed - Instead respondent is directed to pay a sum of
Rs. 20,00,0001- in favour of the appellant towards
1101
H
1102
SUPREME COURT REPORTS
(2014] 6 S.C.R.
A compensation for depriving him from erjoying the suit
property - Lease.
·
Lease: Destruction of leased building - Status of lessee
- Held: When there is a lease of a house or a shop it cannot
8 be treated as a. lease of structure but also a lease of .site -
Once a tenancy is created in respect of a building standing
on the land it is the building and the land which are both
components of the subject-matter of demise and the
destruction of the building alone does not determine the
tenancy when the land which is the site of the building
C continues to exist - This interpretation, is in accord with s. 1 OB
of the TP Act - Transfer of Property Act, 1882
·
The appellant had taken a godown over the southern
portion of the suit property on rent and was using the
D access on eastern side of ·the godown for approaching
the municipal road and in bringing its goods to the
godown. The owner of the northern portion of the suit
property sold his portion to the respondent. The
respondent demolishea the construction existing over
E his portion and started digging for basement. Later on,
the respondent purchased the southern portion of the
suit property also. The case of the appellant that the
digging work exposed the base of the godown to the
vagaries of nature.During the rainy season, water got
F aceumulated in the said .ditch and entire structure of
godown was threatened. When the appellant inquired the
respondent about the same, the respondent asked the
appellant to vacate the godown. The respondent also
threatened the workers of the appellant. Therefore,
G according to the appellant, the excavation made by the
respondent was intentional and directed towards
terminating the tenancy of the appellant by adopting
dubious methods. It was also alleged that the respondent
also closed the access road to the suit property. Thus,
H the appellant was unable to keep its goods in or take out
SHAHA RATANSI KHIMJI & SONS v. PROPOSED KUMBHAR 1103
SONS HOTEL P. LTD.
its goods from the suit property, causing irreparable loss A
to the appellant.
The appellant filed a suit with a prayer that the
respondent be restrained from closing the access of the
appellant to the suit property from the municipal road and e.
digging in a manner which would cause damage to the
godown. The civil court dismissed the suit. The first
appellate court upheld the decision of th

## Text

_Characters 0–39,886 of 52,121. This is a partial read: ask again with offset=39886 for what follows._

[2014) 6 S.C.R. 1101
M/S SHAHA RATANSI KHIMJI & SONS
v.
PROPOSED KUMBHAR SONS HOTEL P. LTD. & ORS.
(CIVIL APPEAL N0.127 OF 2007)
A
JULY 10, 2014.
B
[R.M.LODHA, CJI, SUDHANSU JYOTI
MUKHOPADHAYA AND DIPAK MISRA, JJ.]
Transfer of Property Act, 1882: ss.105, 108, 111 - Held:
A lease of immovable .property is a transfer of right to enjoy C
such property in -consideration of price paid as per s. 105 of
the T.P. Act - By way of lease, a right and interest is creat~d
which stands transferred in favour of the lessee - The
immovable property, thereafter, only can be reverted back on
detennination of such right and interest in accordance with the
D
provisions of the T.R. Act - Therefore, once the right of lease
is transferred in favour of the lessee, the des~ruction of a
house/building constructed on the lease property does not
detennine the tenancy rights of occupant which is incidental
to the contract of the lease which continues to exist between
E
the parties - In the instant case, respondent purchased the
lessor's interest - Lease continued even thereafter and did not
extinguish - The lease was subsisting when the shares of the
land were purchased by the respondent - But the interest of
the lessee was not purchased by the respondent - Demolition
F
and destruction of the tenanted premises - Tenancy of the
appellant cannot be said. to have been determined
consequent upon demolition of the tenanted premises - High
Court wrongly held that tenancy rights of appellant had lapsed
- However, taking into considef"{ltion the fact that the appellant
G
has not been in possession of the suit property since long,
restoration of possession of suit property to the appellant is
not directed - Instead respondent is directed to pay a sum of
Rs. 20,00,0001- in favour of the appellant towards
1101
H
1102
SUPREME COURT REPORTS
(2014] 6 S.C.R.
A compensation for depriving him from erjoying the suit
property - Lease.
·
Lease: Destruction of leased building - Status of lessee
- Held: When there is a lease of a house or a shop it cannot
8 be treated as a. lease of structure but also a lease of .site -
Once a tenancy is created in respect of a building standing
on the land it is the building and the land which are both
components of the subject-matter of demise and the
destruction of the building alone does not determine the
tenancy when the land which is the site of the building
C continues to exist - This interpretation, is in accord with s. 1 OB
of the TP Act - Transfer of Property Act, 1882
·
The appellant had taken a godown over the southern
portion of the suit property on rent and was using the
D access on eastern side of ·the godown for approaching
the municipal road and in bringing its goods to the
godown. The owner of the northern portion of the suit
property sold his portion to the respondent. The
respondent demolishea the construction existing over
E his portion and started digging for basement. Later on,
the respondent purchased the southern portion of the
suit property also. The case of the appellant that the
digging work exposed the base of the godown to the
vagaries of nature.During the rainy season, water got
F aceumulated in the said .ditch and entire structure of
godown was threatened. When the appellant inquired the
respondent about the same, the respondent asked the
appellant to vacate the godown. The respondent also
threatened the workers of the appellant. Therefore,
G according to the appellant, the excavation made by the
respondent was intentional and directed towards
terminating the tenancy of the appellant by adopting
dubious methods. It was also alleged that the respondent
also closed the access road to the suit property. Thus,
H the appellant was unable to keep its goods in or take out
SHAHA RATANSI KHIMJI & SONS v. PROPOSED KUMBHAR 1103
SONS HOTEL P. LTD.
its goods from the suit property, causing irreparable loss A
to the appellant.
The appellant filed a suit with a prayer that the
respondent be restrained from closing the access of the
appellant to the suit property from the municipal road and e.
digging in a manner which would cause damage to the
godown. The civil court dismissed the suit. The first
appellate court upheld the decision of the civil court. By
impugned judgment, the High Court dismissed the
second appeal on the ground that the tenancy right of the C
appellant had lapsed. The instant appeal was filed
challenging the order of the High Court.
On 5th January, 2007, the matter on reference came
up before the Bench of Three Judges in view of
inconsistency in the view taken in *Vannattankendy lbrayi
D
case and **T. Lakshmipathl case.
In the case of *Vannattankandy lbrayi, this Court
formulated two questions for consideration: (a) Whether ·,
the tenancy in respect of the premises governed by the
E
Kerala Buildings (Lease and Rent Control) Act is
extinguished by destruction of the subject-matter of
tenancy i.e. the premises by natural calamities, and (b) On
the destruction of property whether the civil court has
jurisdiction to entertain and try the suit for recovery of
F
possession of land brought by the landlord. Both
questions were answered in the affirmative.
In Lakshmipathi, this Court held that lease of a
building includes, the land on which the building stands.
So even if the building is destroyed or demolished, the
G
lea:;e is not determined as long as the land beneath it
continues to exist. Doctrine of frustration cannot be
invoked on destruction or demolition of a building under
lease where not only privity of contract but privily of
estate is also created.
H
1104
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A
Allowing the appeal, the Court
HELD: 1. Immovable property means landed property
and may include structures embedded in the earth such
as walls or buildings for the permanent beneficial
8 enjoyment. A lease of immovable property is a transfer
of right to enjoy such property in consideration of price
paid as per Section 105 of the T.P. Act. By way of lease,
a right and interest is created which stands transferred
in favour of the lessee. The immovable property,
thereafter, only can be reverted back on determination of
C such right and interest in accordance with the provisions
of the T.P. Act. Therefore, once the right of lease is
transferred in favour of the lessee, the destruction of a
house/building constructed on the lease property does
not determine the tenancy rights of occupant which is
D incidental to the contract of the lease which continues to
exist between the parties. [Para 22] [1114-C-F]
2. Section 108 postulates the rights and liabilities of
lessor and lessee. If a right is not conferred by the Statute
E on the lessor for determination, except one exception
which is clearly stipulated there in Section 108 (B) (e) by
the Legislature; it would not be permissible for the Court
to add another ground of the base or fulcrum of ethicality,
difficulty or assumed supposition. The singular exception
F that has been carved out is the wrongful act or default
on the part of the lessee which results in the injury to the
property that denies the benefit. In all other circumstances
which find mention under Section 111 of the Act, are the
grounds for determination of the lease. This is the
plainest construction of the provision and there is no
G other room for adding to or subtracting anything from it.
[Para 29] [1124-H; 1125-A-C]
H
3. When there is a lease of a house or a shop it
cannot be treated as a lease of structure but also a lease
SHAHA RATANSI KHIMJI & SONS v. PROPOSED KUMBHAR 1105
SONS HOTEL P. LTD.
of site. Once a tenancy is created in respect of a building
A
standing on the land it is the building and the land which
are both components of the subject-matter of demise and
the destruction of the building alone does not determine
B
the tenancy when the land which is the site of the building
continues to exist. This interpretation, is In accord with
Section 108 of the Act. It is reflectible that in
*Vannattankandy lbrayi's case, the two-Judge Bench
observed that the rights stand extinguished as on the
distinction of the demise, for there is destruction of the
superstructure and in its non-existence there is no c
subject matter. Thus, the land has been kept out of the
concept of subject matter. The Court in the said case
failed to appreciate that there are two categories of
subject-matters, combined in a singular capsule, which
is the essence of provision under the Transfer of 0
Property Act and not restricted to a singular one, that is,
the superstructure. In ·~ Lakshmipathi the Court took
note of the fact that the land and superstructure standing
on it as a singular component for the purpose of tenancy.
It is in tune with the statutory provision. Th~refore, in the
event of the tenancy having been created in respect of a
building standing on the land, it is the building and the
land which are both components of the subject-matter of
demise and the destruction of the building alone does not
determine the tenancy when the land which was the site
of the building continues to exist. [Paras 31 and 32] [1125G-H; 1126-A-G]
*Vannattankandy lbrayi Vs. Kunhabdu//a Hajee (2001) 1
sec 564: 2000 (5) Suppl. SCR 630 • overruled ·
**Lakshmipathi & Ors. Vs. R.Nithyananda Reddy & Ors.
(2003) 5 sec 150: 2003 (3) SCR 173 • relied on.
V. Kalpakam Amma vs. Muthurama Iyer Muthurkrishna
. Iyer AIR 1995 Kerala 99 - referred to.
E .
F
G
H
1106
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A
4. In the instant case, it is not in dispute that the
respondent purchased the lessor's interest. "The lease
continued even thereafter and. did not extinguish. The
lease was subsisting when the shares of the land were
purchased by the respondent. But the interest of the
B lessee was not purchased by the respondent. What was
purchased by the respondent was the right and interest
of ownership of the property. The interest of the appellant
as lessee did not vest with the respondent. Therefore, the
tenancy of the appellant cannot be said to have been
c determined consequent upon demolition and destruction
of the tenanted premises. The impugned judgment is set
aside. However, taking into consideration the fact that the
appellant is not in possession of the suit property since
long, restoration of possession of suit property to the
0 appellant is not directed. Instead the respondent is
directed .to pay a sum of Rs. 20,00,0001- in favour of the
appellant towards compensation for depriving the
appellant from enjoying the suit property, within two
months, failing which it shall be liable to pay interest @
E 6% per annum from the date of the judgment. [Paras 33
and 34] [1126-H; 1127-A-F]
Hind Rubber Industries (P) Ltd. vs.
Tayebhai
Mohammedbhai Bagasarwalla, AIR 1996 Born. ~89; Raja
Dhruv Dev Chand v. Harmohinder Singh and Anr. AIR 1968
F SC 1024: 1968 SCR-539; D.G. Gose & Co. (Agents) (P) Ltd.
v. State of Kera/a (1980) 2 SCC 410: 1980 (1) SCR 804 ;
Corpn. of the city of Victoria v. Bishop of Vancouver Island
AIR 1921 ·PC 240 - referred to.
G
Case Law Reference:
2000 (5) Suppl. SCR 630 Overruled
Para 3
2003 (3) SCR 173
Relied on
Para 4
AIR 1995 Kerala 99
Referred to
Para 23
·H
SHAHA RATANSI KHIMJI & SONS v. PROPOSED KUMBHAR 1107
SONS HOTEL P. LTD.
AIR 1996 Bom. 389
Referred to
Para 24
1968 SCR 339
Referred to
Para 30
1980 (1) SCR 804
Referred to
Para 31
AIR 1921 PC 240
Referred to
Para 31
CIVIL APPELLATE JURISDICTION: Civil Appeal No.127
of 2007
A
B
From the Judgment and Order dated 18.07.2006 of the
High Court of Judicature at Bombay in Second Appeal No.109 c
of 2006.
V.A. Mohta, Braj K. Mishra, Aparna Jha, Nilkantha Nayak,
Vishwajit Singh for the Appellants.
Gaurav Agarwal for the Respondent.
D
The Judgment of the Court was delivered by
SUDHANSU JYOTI MUKHOPADHAYA, J. 1.' This
appeal is directed against the judgment and decree dated·18th
July, 2006 passed by the High Court of Judicature at Bombay E
in Second Appeal No. 109 of 2006. By the impugned judgment,
the High Court affirmed the concurrent finding of the lower courts
that the appellant's tenancy right had lapsed and dismissed the
second appeal.
2. When the matter came before this Court, vide order
dated 5th January, 2007, this Court referred the matter to a
Bench of three Judges. The said order reads as under:
F
''Apparently there seems to be inconsistency in the wew
G
taken by this Court in Vannattankandy lbrayi Vs.
Kunhabdulla Hajee {(2001) 1 SCC 564]
and~
T.Lakshmipathi & Ors. Vs. R.Nitbyananda Reddy & Ors;
{(2003J 5 sec 150].
Leave granted.
H
1108
SUPREME COURT REPORTS
[2014) 6 S.C.R.
A
The matter shall be placed before a three Judge Bench.
Status quo shall be maintained in the meanwhile."
3. In the case of Vannattankandy lbrayi Vs. Kunhabdulla
Hajee, (2001) 1 SCC 564, this Court formulated two questions
B for consideration:
c
D
"(a) Whether the tenancy in respect of the premises
governed by the Kera/a Buildings (Lease and Rent
Control) Act (hereinafter refeffed to as "the State Rent
Act'? is extinguished by destruction of the subject-matter
of tenancy i.e. the premises by natural calamities, and
(b) On the destruction of property whether the civil court
has jurisdiction to entertain and try the suit for recovery of
possession of land brought by the landlord."
Both questions were answered in the affirmative.
4. In Lakshmipathi & Ors. Vs. R.Nithyananda Reddy &
Ors. (2003) 5 SCC 150, this Court held that lease of a building
E includes, the land on which the building stands. So even if the
building is destroyed or demolished, the lease is not determined
as long as the land beneath it continues to exist. Doctrine of
frustration cannot be invoked on destruction or demolition of a
building under lease where not only privity of contract but privity
F of estate is also created.
5. In the present case, the suit property comprises of Plot
No. 525, Shaniwar Peth, Karad in District Satara, Maharashtra.
There was a god own on the southern side of the suit property.
The eastern portion of the suit property was open and there was
G a road admeasuring 10 to 12 ft. from which the municipal road
could be accessed. On the horthern portion of the suit property,
there was one RCC building. The northern 11/16th portion of
the suit property belonged to one Vinayak Patwardhan whereas
the southern 5/16th share, on which the godown was
H constructed belonged to one Ujjwal Lahoti.
SHAHA RATANSI KHIMJI & SONS v. PROPOSED KUMBHAR 1109
SONS HOTEL P. LTD. [SUDHANSU JYOTI MUKHOPADHAYA, J.]
6. In or about 1961-62, the appellant firm took the godown
A
over the suit property on rent from Ujjwal Lahoti; Since then the
appellant has been continuously paying rent to Ullwal Lahoti and
storing its goods in the godown. The appellant was using the
access on the eastern side of the godown for approaching the
municipal road and in bringing its goods to the godown.
B
7. The case of the appellant is that the respondent had
purchased 11/16th share of Vinayak Pa.twardhan in Plot No.
525 by two sale deeds dated 9th September, 1971 and 21st
January, 1978, After purchasing the plot, the respondent
C
demolished the RCC building existing over the property and
~started digging for basement for construction of a hotel. Later,
on 4th May, 1990, the respondent purchased the remaining 5/
16th share from Ujjwal Lahoti.
8. Further case of the appellant is that the respondent(s)
D
. without obtaining any requisite permission from the municipality
started digging a ditch towards the northern side wall of the suit
property, thereby exposing the northern base of the godown to
the vagaries of nature. The said ditch was nearly 13.6 ft. deep
and exposed the entire base of the godown. During the rainy
E
season, water got accumulated in the said ditch and the entire
structure of godown was threatened. It weakened the foundation
of godown and subjected the entire structure of godown to the
danger of collapsing. When the appellant inquired the
respondent about the same, the respondent asked the
F
appellant to vacate the godown. The respondent also
threatened the workers of the appellant. Therefore, according
to the appellant, the excavation made by the respondent was
intentional and directed towards terminating the tenancy of the
appellant by adopting dubious methods. It is also alleged that
G
the respondent also closed the access road to the suit property.
Thus, the appellant was unable to keep its goods in or take out
its goods from the suit property, causing irreparable loss to the
appellant.
9. The appellant filed a Regular Civil Suit No. 211 of 1990
H
1110
SUPREME COURT REPORTS
[2014) 6 S.C.R.
A
in the Court of llnd Jt.Civil Judge, J.D. Karad, at Karad. In the
said civil suit, the appellant prayed that the respondent be
restrained from closing the access of the appellant to the suit
property from the municipal road. The appellant further prayed
that the respondent be restrained from digging in a manner
B which would cause damage to the godown.
10. In the said suit, initially ad interim injunction was
granted restraining the respondent from further digging the suit
property. Finally, on 28th May, 1990, ex-parte interim injunction
was vacated. Aggrieved by the same, the appellant filed a
C Misc. Civil Appeal No. 123 of 1990 before the lllrd Additional
District Judge, Satara against the order passed in RCS No.
211 of 1990.
11. The said appeal was also dismissed on 16th April,
D 1996. It was alleged that the respondent thereafter went ahead
with further destruction of the godown and demolished the
western wall of the godown on 21st October, 1996, Aggrieved
by the same, the appellant moved an application for
amendment of the plaint bringing on record that on 21st
E October, 1996, the respondent again pulled down some portion
of the western wall of the godown and dUe to the damage
caused to base of the property, during the rainy season the
remaining walls also had collapsed. The appellant sought
amendment of the plaint and inclusion of prayer to the effect
F that the respondent be directed to reconstruct the walls by order
of mandatory injunction. The appellant further prayed that it may
be allowed to reconstruct the walls of the godown and the
respondent should ·not be allowed to destroy or disturb the
appellant from construction of the godown.
G
H
12. The amendment sought for by the appellant was initially
not allowed by the learned Civil Judge. The High Court by order
dated ~5th March, 2002 in Civil Revision No. 447 of 2002
allowed the amendment.
13. The respondent filed written st~tement and additional
SHAHA RATANSI KHIMJI & SONS v. PROPOSED KUMBHAR · 1111
SONS HOTEL P. LTD. [SUDHANSU JYOTI MUKHOPADHAYA, J.]
Nritten statement in which one of the grounds was taken was
A
that godown got demolished due to natural cause and not due
to the acts of th~ respondent.
14. By the Judgement and decree dated 30th August,
2002, learned Civil Judge dismissed the suit filed by the
appellant.
15. Being aggrieved by the judgement and decree passed
by the Trial Court, the appellant filed a Regular Civil Appeal No.
86 of 2002 before the learned Addi. District Judge, Karad. By
B
its judgement and order dated 30th November, 2005, the
C
learned Addi. District Judge, Karad dismissed the appeal of
the appellant.
16. Against the judgement and decree of the Learned
Additional District Judge, Karad, the appellant filed Second
D
Appeal No. 109 of 2006 before the High Court of Judicature
at Bombay. By its impugned judgement and decree dated 18th
July, 2006, the High Court dismissed the second appeal on the
ground that the tenancy right of the appellant had lapsed and
no substantial question of law was involved in the appeal.
17. Learned counsel appearing for the appellant submitted
that even after the destruction of the tenanted premises, the
tenancy is not determined, and hence the appellant is entitled
E
to the benefit of Section 108(B)(e) of the Transfer of Property
Act, 1882 (hereinafter referred to as 'the TP Act'). It was
F
contended that even if the tenanted premises is completely
destroyed and renders the tenanted premises substantially or
permanently unfit for the purpose for which it was let out, the
lease subsists till the tenant terminates the lease.
18. In order to fully and appropriately appreciate the issue
involved in the present case, it is desirable to refer to the
relevant provisions of the Transfer of Property Act, 1882-(T.P.
Act for short).
·
G
H
A
B
c
D
1112
SUPREME COURT REPORTS
[2014] 6 S.C:R.
19. Chapter V of the T.P. Act, 1882 deals with the lease
of immovable property. Section 105 of the T.P. Act defines
'lease' and the said definition is as under:
"105. Lease defined.-
A lease of immoveable
property is a transfer of a right to enjoy such property,
made for a certain time, express or implied, or in
perpetuity, in consideration of a price paid or promised,
or of money, a share of crops, service or any other thing
of value, to be rendered periodically or on specified
occasions to the transferor-by the transferee, who accepts
the transfer on such terms.
Lessor, lessee, premium and rent defined. -The transferor
is called the lessor, the transferee is called the lessee, the
price is called the premium, and the money, share, service
or other thing to be so rendered is called the rent."
20. Section 108 of the T.P. Act explains the rights &
liabilities of lessor and lessee and provisions of the said
section relevant to the present case i.e. Section 108(B)(e)
E reads as under:
"108. Rights and liabilities of lessor or lessee. _, In the
absence of a contract or local usage to the contrary, the
lessor and the lessee of immovable property, as against
one another, respectively, possess the rights and are
F
subject to the liabilities mentioned in the rules next
following, or such of them as are applicable to the
property leased:-
G
H
(A) Rights and Liabilities of the Lessor
xxxxx
(BJ Rights and'/iabilities of the Lessee
(e) If 16y fire, tempest or flood, or violence of any army or
of a mob, or other irresistible force, any material part of
SHAHA RATANSI KHIMJI & SONS v. PROPOSED KUMBHAR
1113
· SONS HOTEL P. LTD. [SUDHANSU JYOTI MUKHOPADHAYA, J]
the property be wholly destroyed or rendered
A
substantially and permanently unfit for the purposes for
which it was let, the lease shall, at the option or the
lessee, be void:
Provided that, if the injury be occasioned by the wrongful
8
act or default of the lessee, he shall not be entitled to
avail himself of the benefit of this provision;"
21. The lease of immovable property is determined by
modes stipulated under Sections 106 and 111 of the T.P. Act.
Section 111 of the T.P. Act reads as under:
C
"111. Determination of lease
A lease of immovable property determines-
(a) by efflux of the time limited thereby,
(b) where such time is limited conditionally on the
happening of some event-by the happening of such event,
(c) where the interest of the lessor in the property
terminates on, or his power to dispose of the same
extends only to, the happening of any event-by the
happening of such event,
(d) in case the interests of the lessee and the lessor in the
whole of the property become vested at the same time in
one person in the same right,
(e) by express surrender, that is to say, in case the lessee
yields up his interest under the lease to the lessor, by
mutual agreement between them,
(f) by implied surrender,
(g) by forfeiture; that is to say, (1) in case the lessee breaks
D
E
F
G
an express condition which provides that, on breach
thereof, the lessor may re-enter; or (2) in case the lessee
H
A
B
c
1114
SUPREME COURT REPORTS
[2014] 6 S.C.R.
renounces his character as such by setting up a title in a
third person or by claiming title in himself; or (3) the lessee
is adjudicated an insolvent and the lease provides.that the
lessor may re-enter on the happening of such event; and
in any of these cases the lessor or his transferee gives
notice in writing to the lessee of his intention to determine
the lease,
(h) on the expiration of a notice to determine the lease, or
to quit, or of intention to quit, the property leased, duly given
by one party to the other."
· 22. Immovable property means landed property and may
include· structures embedded in the earth such as walls or
buildings for the permanent beneficial enjoy111ent. A lease of
immovable property is a transfer of right to enjoy such property
D in consideration of price paid as per Section 105 of the T.P.
Act. By way of lease, a right and interest is created which
stands transferred in f~vour of ttie lessee. The immovable
property, thereafter, only can be reverted back on determination
of such right and interest in accordance with the provisions of
E the T.P. Act. Therefore, once the right of lease is transferred in
favour of the lessee, the destruction of a house/building
constructed on the lease property does not determine the
tenancy rights of occupant which is incidental to the contract of
the lease which continues to exist between the parties.
F
23. The Kerala High Court in V. Kalpakam Amma vs.
Muthurama Iyer Muthurkrishria Iyer, AIR 1995 Kerala 99, held
that there cannot be a building withoufa. site and once a
structure is put up in the land the site becomes the part of the
structure and, thereafter the site becomes part of the building.
G T.he Court further held:
"14. The Supreme Court had also occasion to consider
the meaning of the word 'building' in D. G. Gouse and Co:
v. State of Kera/a (1980) 2 SCC 410: (AIR 1980 SC 271).
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lt was a case challenging the constitutionality of the
SHAHA RATANSI KHIMJI & SONS v. PROPOSED KUMBHAR 1115
SONS HOTEL P. LTD. [SUDHANSU JYOTI MUKHOPADHAYA, J.]
Kera/a Building Tax Act, 1975. Paragraph 21 of the
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judgment deals with the definition of the word 'building'.
It read thus:-
"The word "building" has been defined in the oxford
Dictionary as follows:
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That which is tJui/t; a structure, edifice; now a structure of
the nature of a house built where it is to stand.
Entry 49 of Schedule VII of the Constitution of India
therefore includes the site of the building as its
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component part. That, if we may say so, inheres in the
concept or the ordinary meaning of the expression
"building".
15. A somewhat similar point arose for consideration in
Corporation of the City of Victoria v. Bishop of Vancouver D
Island, AIR 1921 PC 240 with reference to the meaning
of the word "building" occurring in Section 197 (1) of the
Statutes of British Columbia 1914. It was held that the
word must receive its natural and ordinary meaning as
"including the fabric or which it is composed, the ground
upon which its walls stand and the ground embraced
within those walls". That appears to us to be the correct
meaning of the word 'building'.
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15A. In Stroud's Judicial Dictionary (Vol.I. 5th Edn.), the
word 'building' is defined thus: "What is a building must
always be a question of degree and circumstances". In
Black's Law Dictionary (5th Edn.), the meaning of the
word building is given as follows: ''.A structure or edifice
enclosing a space within its walls, and usually, but not
G
necessarily, covered with a roof". In Bourvier's Law
Dictionary (A Concise Encyclopedia of the Law Vol. I. 3rd
Revision) the meaning of building is given as "an edifice,
erected by art, and fixed upon or over the soil, composed
of brick, marble, wood, or other proper substance,
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connected together, and designed for use in the position
in which it is so fixed. "
16. The above are some of the natural meanings that are
given to the word 'building'. Adopting the·above meaning,
the word 'building' must take in the site also, as part of it.
If that is so, without site, there cannot be a structure and
the site becomes an integral part of the building. Without
a site, the super structure of the building on the land
cannot normally exist. Thus, when there is a lease of a
building, such lease would normally take in the site
unless it specifically excluded from the land. "
24. Similar issue was considered by the Bombay High
Court in Hind Rubber Industries (P) Ltd. vs. Tayebhai
Mohammedbhai Bagasarwalla, AIR 1996 Born. 389. In the said
D case, the High Court obseryed as under:
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"16. In my view, the correct legal position in this country
appears to be that the destruction of the tenanted
structure does not extinguish the tenancy and the right
of occupation of the tenant under the contract of tenancy
continues to exist between the parties. Merely because
the tenanted structure has been destroyed or
demolished, the right transferred under the lease cannot
be said to have come to an end, and the relationship of
lessor and lessee continues to exist. The destruction of
the tenanted premises does not destroy the tenancy
rights nor does it bring to an end the relationship of lessor
and lessee or for that matter landlord and tenant. The
lessee continues to be lessee in the property leased
even after its destruction by fire or such like event unless
the lessee exercises his option of treating such lease as
void. It may be observed that Section 108 of the T. P. Act
deals with the rights and liabilities of lessor and lessee
and Part-Band clause (e) of Section 108 provides that if
the property leased in wholly destroyed or rendered
substantially and permanently unfit for the purposes for
SHAHA RATANSI KHIMJI & SONS v. PROPOSED KUMBHAR
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which it was leased by fire, tempest or flood or violence
A
of any army or of a mob or other irresistible force, such
lease may be rendered -void at the option of the lessee
provided of course that such injury to the lease property
has not been occasioned by the wrongful act or default
of the lessee. That means that right of the lessee in the
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leased property subsists even if the leased properly has
been destroyed by fire, tempest or floocf or violence of
an army or of a mob or other irresistible force unless the
lessee exercises his option that on happening of such
events the iease has been rendered void. By necessary c
corollary, therefore, if the leased property is destroyed
wholly by fire, the lease cannot be said to be
extingui§hed, nor can it be said that lessee's right in the
leased property has come to an end unless the lessee
exercises such option. The express provision in clause
0
(e) of Section 108 leaves no manner of doubt that on
destruction of leased property by fire, the lease cannot
be said to be extinguished, automatically and in this view
of the matter the statement of law made in Article 592 of
American Jurisprudence and para 2066 of Woodfall on·. E
landlord and tenant and relied upon by the learned
counsel for the Plaintiff/Respondent cannot be applicable
in our country. The view of the Kera/a High Court in Dr.
V. Siddharthan's case: (supra) is a/so not acceptable
because of no proper construction given to Section
108(e) of the T.P. Act."
25. Adverting to one of the situations similar to that, now
before us, the two Judge-Bench of this Court in Vannattankandy
lbrayi (supra) observed as under:
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"20. From the aforesaid decisions there is no doubt that
if a building is governed by the State Rent Act the tenant
cannot claim benefit of the provisions of Sections 106,
108 and 114 of the Act. Let us test the arguments of
learned counsel for the appellant that on the destruction
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of the shop the tenant can resist his dispossession on
the strength of Section 108(B)(e). In this case what was
let out to the tenant was a shop for occupation to carry
on business. On the destruction of the shop the tenant
has ceased to occupy the shop and he was no longer
carrying bn business therein. A perusal of Section
108(B)(e) shows that where a premises has fallen down
under the circumstances mentioned therein, the
destruction of the shop itself does not amount to
determination of tenancy under Section 111 of the Act.
In other words there is no automatic determination of
tenancy and it continues to exist. If the tenancy
continues, the tenant can only squat on the vacant land
but cannot use the shop for carrying on business as it is
destroyed and further he cannot construct any shop on
the vacant land. Under such circumstances it is the
tenant who is to suffer as he is unable to enjoy the fruits
of the tenancy but he is saddled with the liability to pay
monthly rent to the landlord. It is for such a situation the
tenant has been given an option under Section 108(B)(e)
of the Transfer of Property Act to render the lease of the
premises as void and avoid the liability to pay monthly
rent to the landlord. Section 108(B)(e) cannot be
interpreted to mean that the tenant is entitled to squat on
the open land in the hope that in future if any shop is
constructed on the site where the old shop existed he
would have right to occupy the newly-constructed
premises on the strength of original contract of tenancy.
The lease of a shop is the transfer of the property for its
enjoyment. On destruction of the shop the tenancy
cannot be said to be continuing since the tenancy of a
shop presupposes a property in existence and there
cannot be subsisting tenancy where the property is not
in existence. Thus when the tenanted shop has been
completely destroyed, the tenancy right staf]dS
extinguished as the demise must have a subject-matter
and if the same is no longer in existence, there is an end
SHAHA RATANSI KHIMJI & SONS v. PROPOSED KUMBHAR 1119
SONS HOTEL P. LTD. [SUDHANSU JYOTI MUKHOPADHAYA, J.]
of the tenancy and therefore Section 10B(B}(e} of the Act
A
has no application in case of premises governed by the
State Rent Act when it is completely destroyed by natural
calamities."
23. In V. Kalpakam Amma(supra) the Kera/a High Court
B
relying upon the definition of "building" in the State Rent
Act held that there cannot be a building without a site and
once a structure is put up in the land the site becomes
part of the structure and thereafter the site becomes part
of the building and on that basis the High Court held that C
once the premises covered by the State Rent Act is
raised to the ground the tenancy continues to survive in
respect of the vacant land. In our view this is not the
correct interpretation of Section 2(1) of the State Rent Act.
Section 2(1) uses the words ''part of a building or hut".
0
The words ''part of the building" do not refer to the land
on which the building is constructed but refer to any other
superstructure which is part of that main building e.g. in
addition to the main building if there is any other
superstructure in the said premises i.e. motor garage or
servant quarters then the same would be part of the
E
building and not the land on which the building has been
so constructed. So far the appurtenant land which is
beneficial for the purpose of use of the building is a/so a
part of the building. Thus according to the definition of
"building" in the State Rent Act the building would include
F
any other additional superstructure in the same premises
and appurtenant land. We are, therefore, of the view that
the interpretation put by the Kera/a High Court on Section
2(1) for holding that the words ''part of a building" mean
the land on which the building has been constructed is
G
not correct. The provisions of the State Rent Act clearly
show that the State Rent Act is a self-contained Act and
the rights and liabilities of landlord and tenant are
determined by the provisions contained therein and not
by the provisions of the Transfer of Property Act or any
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other law. The rights of a landlord under the general law
are substantially curtailed by the provisions of the State
Rent Act as the Act is designed to confer benefit on
tenants by providing accommodation and to protect them
from unreasonable eviction. In the present case.what we
find is that the subject-matter of tenancy was the shop
room which was completely destroyed on account of
accidental fire and it was not possible for the tenant to
use the shop for which he took the shop on rent. After the
shop was destroyed the tenant, without consent or
permission of the landlord, cannot put up a new
construction on the site where the old structure stood. If
it is held that despite the destruction of the sh9p, tenancy
over the vacant land continued unless the tenant
exercises his option under Section 108(B)(e) of the Act
the situation that emerges is that the tenant would
continue as a tenant of a non-existing building and liable
to pay rent to the landlord when he is unable to use the
· shop. The tenancy of the shop; which was let out, was a
superstructure and what is protected by the State Rent
Act is the occupation of the tenant in the superstructure.
If the argument of the appellant's counsel is accepted
then it would mean that although the tenant on the
destruction of the shop cannot put up a new structure on
the old site still he would continue to squat on the vacant
land. Under such situation it is difficult to hold that the
tenancy is not extinguished on the total destruction of the
premises governed by the State Rent Act. Under English.
law, in a contractual tenancy in respect of building and
land the liability to pay the rent by the tenant to the
landlord continues even on the destruction of the building
whereas there is no liability of th_e tenant to pay rent to
the landlord on the destruction of the premises governed
by the State Rent Act. Therefore, the view taken by the
Bombay High Court in Hind Rubber Industries (P)
Ltd.(supra) does not lay down the correct view of law. This
Court a number of times has held that any special leave
SHAHA RATANSI KHIMJI & SONS v. PROPOSED KUMBHAR . 112'1
SONS HOTEL P. LTD. [SUDHANSU JYOTI MUKHOPADHAYA, J.]
petition dismissed by this Court without giving a reason
A
has no binding force on its subsequent decisions.
Therefore, the two aforesaid cases relied on by counsel
for the appellant are of no assistance to the argument
advanced by him.
B
24. However, the situation would be different where a
landlord himself pulls down a building governed by the
State Rent Act. In such a situation the provisions
contained in Section 11 of the State Rent Act would be
immediately attracted and the Rent Control Court would
C
be free to pass an appropriate order.
25. Coming to the next question whether the civil court
was competent to entertain and try the suit filed by the
respondent for recovery of possession of the vacant land.
As already stated above, the tenancy in the present case 0
was of a shop room which was let out to the tenant. What
is protected by the ·State Rent Act is the occupation of
the tenant in the superstructure. The subject-matter of
tenancy having been completely destroyed the tenant .
can no longer use the said shop and in fact he has E
ceased to occupy the said shop. Section 11 of the State
Rent Act c/Qes not provide for eviction of the tenant on
the ground of destruction of the building or the
superstructure. Thus when there is no superstructure. in.
existence the landlord cannot claim recovery of F
possession of vacant site under the State Rent Act. The
only remedy available to him is to file a suit in a civil couit
for recovery of possession of land. In view of the matter
the civil court was competent to entertain and try the suit
filed by the respondent landlord. H
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26. Subsequently, another two-Judge Bench of this Court
considered the same question in T. Laxmipathi(Supra). In the
said case this Court noticed the decision of Bombay High Court
in Hind Rubber Industries (supra) and other High Courts and
observed as under:
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"20. The tenancy canno, be said to have been
determined by attracting applicability of the doctrine of
frustration consequent upon demolishing of the tenancy
premises.