# DUNLOP INDIA LIMITED v. AP. RAHNA AND ANR

- **Citation:** [2011] 5 S.C.R. 1080
- **Court:** Supreme Court of India
- **Decided:** 2011-05-04
- **Case number:** Civil Appeal No. 3911 of 2011
- **Bench:** G.S. Singhvi, Asok Kumar Ganguly
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/dunlop-india-limited-v-ap-rahna-and-anr-27686
- **Pages:** 47

## Headnote

Kerela Buildings (Lease and Rent Control) Act, 1965:
c
s.11(4)(v)- Eviction on the ground that tenant ceased to
occupy the premises for six months without reasonable cause ,
- Held: If the premises is let out for business or commercial
purpose, complete cessation of the business/commercial
activity may give rise to a presumption that the tenant had
D ceased to occupy the premises - The inittal burden to show
that the tenant has ceased to occupy the premises
continuously for 6 months is always on the landlord· - Once
such evidence is adduced, the burden shifts on the tenant to
prove that there was reasonable cause for his having ceased
E to occupy the tenanted premises for a continuous period of 6
months - In the instant case, the tenant did not produce any
evidence to prove physical occupation of the premises or any
business transaction - It also failed to produce any evidence
to show that there was reasonable cause for non occupation
of the suit premises -
The tenant was declared a sick
F company - It had neither pleaded nor any evidence was
produced to show that the financial stringency was due to the
reasons beyond its control - Therefore, so called financial
stringency cannot be construed as reasonable cause within
the meaning of s.11(4)(v) - The finding of courts below that
G the landlord had succeeded in making out a case for eviction
u/s.11 (4)(v) and there was no reasonable cause for the tenant
to have ceased to occupy the suit premises continuously for
a period of six months is upheld - Rent and eviction.
H
1080
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1081
s.11(4)(v) - Financial difficulty of the tenant whether A
reasonable cause for non-occupation of the tenanted
premises - Held: If the suit premises is ·let out for industrial ·
or commercial/business purpose and the same is not used
for the said purpose continuously for a period of six months,
the tenant cannot plead financial crunch as a groc.md to justify
B
non-occupation of the building unless cogent evidence is
produced by him to prove that he could not carry on the
industrial or commercial/business activity due to fiscal
reasons which were beyond his control - Legal possession
of the building by the tenant by itself, is not sufficient for c
refusing an order of eviction unless the tenant proves that
there was reasonable cause for his having ceased to occupy
the building - Sick Industrial Companies (Special Provisions)
Act, 1985 - s.22(1).
Applicability of s.22(1) ~f SICA, 19B5 to eviction D
proceedings - Held: Prohibition contained in s.22(1) does not
operate as a bar to the maintainability of a petition filed for
evictiOn of tenant - Sick Industrial Companies (Special
Provisions) Act, .1985 - s. 22(1 ).
·
Res judicata: Eviction petitions on the ground that tenant
ceased to occupy the premises continuously for six months
from June 1998 without any reasonable cause- Rent Control
Court decreed the suit - Appellate Court set aside the decree
E
- High Court affirmed the same - Meanwhl1e another set of F
eviction petitions filed on the ground that tenant ceased· to
occupy the premises from September 2001 continuously for
six months without any reasonable cause - Held: The second
set of rent control petitions were not barred by res judicata
because the period of non-occupation was different in the two G
petitions and even though the ground of eviction in the' two
sets of petitions was similar, the same were based on different
causes.
Words and phrases:
H
1082
SUPREME COURT REPORTS
[2011] 5 S.C.R.
A
Word "occupy" - Connotation of, in the context of
B
s.11(4){v) of the Kerela Buildings (Lease and Rent Control)
Act, 1965.
.
Occupy and legal possession - Distinction between.
The respondents-landlord filed the eviction petitions
against the appellant-tenant on the various grounds
under the Kerela Buildings (Lease and Rent Control) Act,
1965 including the ground prescribed under Section
11(4)(v) of the Act alleging that the appellant had ceased
C to occupy the suit pr

## Text

_Characters 0–39,810 of 89,803. This is a partial read: ask again with offset=39810 for what follows._

A
B
[2011] 5 S.C.R. 1080
DUNLOP INDIA LIMITED
v.
AP. RAHNA AND ANR.
(Civil Appeal No. 3911 of 2011)
MAY 4, 2011
[G.S. SINGHVI AND ASOK KUMAR GANGULY, JJ.]
Kerela Buildings (Lease and Rent Control) Act, 1965:
c
s.11(4)(v)- Eviction on the ground that tenant ceased to
occupy the premises for six months without reasonable cause ,
- Held: If the premises is let out for business or commercial
purpose, complete cessation of the business/commercial
activity may give rise to a presumption that the tenant had
D ceased to occupy the premises - The inittal burden to show
that the tenant has ceased to occupy the premises
continuously for 6 months is always on the landlord· - Once
such evidence is adduced, the burden shifts on the tenant to
prove that there was reasonable cause for his having ceased
E to occupy the tenanted premises for a continuous period of 6
months - In the instant case, the tenant did not produce any
evidence to prove physical occupation of the premises or any
business transaction - It also failed to produce any evidence
to show that there was reasonable cause for non occupation
of the suit premises -
The tenant was declared a sick
F company - It had neither pleaded nor any evidence was
produced to show that the financial stringency was due to the
reasons beyond its control - Therefore, so called financial
stringency cannot be construed as reasonable cause within
the meaning of s.11(4)(v) - The finding of courts below that
G the landlord had succeeded in making out a case for eviction
u/s.11 (4)(v) and there was no reasonable cause for the tenant
to have ceased to occupy the suit premises continuously for
a period of six months is upheld - Rent and eviction.
H
1080
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1081
s.11(4)(v) - Financial difficulty of the tenant whether A
reasonable cause for non-occupation of the tenanted
premises - Held: If the suit premises is ·let out for industrial ·
or commercial/business purpose and the same is not used
for the said purpose continuously for a period of six months,
the tenant cannot plead financial crunch as a groc.md to justify
B
non-occupation of the building unless cogent evidence is
produced by him to prove that he could not carry on the
industrial or commercial/business activity due to fiscal
reasons which were beyond his control - Legal possession
of the building by the tenant by itself, is not sufficient for c
refusing an order of eviction unless the tenant proves that
there was reasonable cause for his having ceased to occupy
the building - Sick Industrial Companies (Special Provisions)
Act, 1985 - s.22(1).
Applicability of s.22(1) ~f SICA, 19B5 to eviction D
proceedings - Held: Prohibition contained in s.22(1) does not
operate as a bar to the maintainability of a petition filed for
evictiOn of tenant - Sick Industrial Companies (Special
Provisions) Act, .1985 - s. 22(1 ).
·
Res judicata: Eviction petitions on the ground that tenant
ceased to occupy the premises continuously for six months
from June 1998 without any reasonable cause- Rent Control
Court decreed the suit - Appellate Court set aside the decree
E
- High Court affirmed the same - Meanwhl1e another set of F
eviction petitions filed on the ground that tenant ceased· to
occupy the premises from September 2001 continuously for
six months without any reasonable cause - Held: The second
set of rent control petitions were not barred by res judicata
because the period of non-occupation was different in the two G
petitions and even though the ground of eviction in the' two
sets of petitions was similar, the same were based on different
causes.
Words and phrases:
H
1082
SUPREME COURT REPORTS
[2011] 5 S.C.R.
A
Word "occupy" - Connotation of, in the context of
B
s.11(4){v) of the Kerela Buildings (Lease and Rent Control)
Act, 1965.
.
Occupy and legal possession - Distinction between.
The respondents-landlord filed the eviction petitions
against the appellant-tenant on the various grounds
under the Kerela Buildings (Lease and Rent Control) Act,
1965 including the ground prescribed under Section
11(4)(v) of the Act alleging that the appellant had ceased
C to occupy the suit premises from June, 1998. The Rent
Control Court held that the appellant had ceased to
occupy the suit premises continuously for six months
without reasonable cause and, therefore, allowed the
petitions and directed the appellant to vacate the
D premises. The Appellate Court set aside the eviction order
passed by the Rent Control Court. The High Court
dismissed the revision petitions filed by the respondents.
During the pendency of the revisions before the High
E Court, the respondents filed fresh eviction petitions under
Sections 11(2)(b), 11 (3), 11 (4)(i), 11 (4)(v). This time, the
respondents pleaded that the appellant had ceased to
occupy the premises since September 2001 without any
reasonable cause. The petitions were allowed by the
F Rent Control Court which was confirmed by the Appellate
Court. The High Court, however, allowed the revision
petitions filed by the appellant and remitted the matter to
the Rent Control Court for fresh adjudication. After
remand, the appellant filed written statement and claimed
that the petitions filed by the respondents were liable to,
G be dismissed as barred by res judicata because earlier
eviction petitions filed by them on similar grounds were
dismissed by the Appellate Court and the High Court. On
merits, the plea of the appellant was that due to financial
constraints, the appellant could not run its business
H
DUNLOP INDIA LIMITED v. A.P. RAHNA AND,ANR. 1083
effectively and profitably and it was declared sick under A
the Sick Industrial Companies (Special Provisions) Act,
1985 by BIFR and appeal against the same was pending
before the AAIFR. The Rent Control Court, Appellate
Court and the High Court concurrently held that the
appellant had ceased to occupy the premises since
B
September 2001, and that the pendency of the
proceedings under the SICA, 1985 could not be
construed as a reasonable cause for non-occupation of
the premises. The instant appeals were filed challenging
· the order of the High Court.
c
Dismissing the appeals, the Court
·_
.. .
.
.
. l ;
HELD: 1.1. The word "occupy" used in Section
· 11(4)(v) of the Kerela Buildings (Lease and ·Rent Control) ·
D·
· Act, 1965 is not synonymous with legal possession in
technical sense. It means actual p'ossession of the
tenanted building or use thereof for the purpose for
which it is let out. If the building is let out for residential
purpose and the tenant is shown to· be continuously
absent from the building for six months, the Court may
E
presume that he has ceased to occupy the building or
abandoned it. If the building is let out for business or
commercial purpose, complete cessation of the business/
commercial activity may give rise to a presumption that
the tenant has ceased to occupy the premises. In either
case, legal possession of the building by the tenant will,
by itself, be not sufficient for refusing an order of eviction
unless the tenant proves that there was reasonable
cause for his having ceased to occupy the building; [Para
17] [1107-D-F]
Paulina Joseph v. ldukki District Wholesale Co-operative
ConsumerStores Ltd. (2006) 1 KLT 603 - approved.
F,
G
1.2. The initial burden to show that the tenant has
ceased to occupy the building continuously for 6 months
H
1084
SUPREME COURT REPORTS
[2011] 5 S.C.R.
A is always on the landlord. He has to adduce tangible
evidence to prove the fact that as on the date of filing the
petition, the tenant was not occupying the building
continuously for 6 months. Once ·such evidence is
adduced, the burden shifts on the tenant to prove that
B there was reasonable cause for his having ceased to
occupy the tenanted premises for a continuous period of
6 months. No strait-jacket formula can be evolved for
determining as to what is the reasonable cause and each
case is required to be decided keeping in view the nature
c of the lease, the purpose for which the premises are let
out and the evidence of the parties. If the building, as
defined in Section 2(1) is let out for industrial or
commercial/business purpose and the same is not used
for the said purpose continuously for a period of six
0 months, the tenant cannot plead financial crunch as a
ground to justify non occupation of the building unless
cogent evidence is produced by him to prove that he
could not carry on the industrial or commercial/business
activity due to fiscal reasons which were beyond his
control. If the tenant does not use the building for the
E purpose for which it is let out, he cannot be said to be
occupying the building merely because he has put some
furniture or articles or machinery under his lock and key.
[Para 18] [1107-G-H; 1108-A-D)
F
Ram Dass v. Davinder (2004) 3 SCC 684: 2004 (3)
SCR 518 - relied on.
Brown v. Brash (1948) 1 All. E.R. 922 - referred to.
Achut Pandurang Kulkarni v. Sadashiv Ganesh
G PhulambrikarmAIR 1973 Born. 210; Ananthasubramania Iyer
v. Sarada Amma 1978 KLT 338; Mathai Antony v. Abraham
(2004) 3 KLT 169; Kurian Thomas v. Sreedharan Menon
(2004).3 KLT 326; Simon & Ors. v. Rappai (2008) 2 KLJ 488
- approved.
DUNLOP INDIA LIMITED v. A.P. RAHNA ANO ANR. 1"085
1.3. In this case, the Rent Control Court, after detailed A
scrutiny of the pleadings and the evidence of the parties
recorded a finding · that while the landowners
(respondents) succeeded in proving that the tenant
(appellant) had ceased to occupy the suit premises for a
period exceeding six months, the latter could not prove
B
that it was occupying the premises or that non
occupation thereof was for a reasonable cause. The· Rent
Control Court took cognizance of the appellant's plea that
it was carrying on business activities from the suit
premises with reduced staff strength but discarded'the c
same by observing that the relevant records like the
attendance register, muster roll, wage register had not
been produced and no evidence was adduced to prove
payment of electricity bills and sale and purchase of
goods. The High Court also analysed the pleadings and
D
evidence of the parties and concurred with the findings
recorded by the Rent Control Court. As against this, the
appellant did not produce any evidence to prove physical
occupation of the premises or any business transaction:
It also failed to produce any evidence to show that there
E
was reasonable cause for non occupation of the suit
premises. [Para 28] [1119-D-G]
2. The argumer:its that the second set of rent control
petitions should have been dismissed as barred by res
judicata because the issue raised therein was directly and
F
substantially similar to the one raised in the first set of
rent control petitions was not tenable for the reason that
while in the first set of petitions, the respondents had
sought eviction on the ground that the appellant had
ceased to occupy the premises from June, 1998, in the
G
second set of petitions, the period of non occupation
commenced from September, 2001 and continued till the
filing of the eviction petitions. That apart, the evidence
produced in the first set of petitions was not found
H
1086
SUPREME COURT REPORTS
[2011) 5 S.C.R.
A acceptable by the Appellate Authority. because till
2.8.1999, the premises were found kept open and alive for
operation. The Appellate Authority also found that in spite
of extreme financial crisis, the management had kept the
business premises open for operation till 1999. In the
B second round, the appellant did not adduce any
evidence worth the name to show that the premises were
kept open or used from September, 2001 onwards. The
Rent Controller took cognizance of the notice fixed on the .
front shutter of the building on 1.10.2001 that the
c company is a sick industrial company under the 1985 Act
and operation has been suspended with effect from
1.10.2001; that no activity had been done in the premises
with effect from 1.10.2001 and no evidence was produced
to show attendance of the staff, payment of salary to the
0 employees, payment of electricity bills from September,
2001 or that any commercial transaction was done from
the suit premises. It is, thus, evident that even though the
ground of eviction in the two sets of petitions was similar,
the same were based on different causes. Therefore, the
evidence produced by the parties in the second round
E was rightly treated as sufficient by the Rent Control Court
and the Appellate Authority for recording a finding that
the appellant had ceased to occupy the suit premises
continuously for six months without any reasonable
cause. [Para 29] [1119-H; 1120-A-G]
F
3.1. The appellant was declared a sick industrial
company on 22.6.1998 and the Operating Agency was
appointed under Section 17(3) of the 1985 Act to examine
the viability of the company. After several hearings, the
G BIFR passed order directing the appellant to sort out all
pending issues with secured creditors, Central/State
Governments, TllC, KSllDC and TNSEP and submit a
revised comprehensive and fully tied up rehabilitation
scheme to the Operating Agency. For the next about five
H
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1087
years, no tangible step was shown to have taken by the
A
appellant for revival of its business activities. In August
and November, 2006, the appellant filed applications
before the BIFR seeking its permission for issue of two
crore equity shares of Rs. 10/- each fully paid up at par
to the company's promoters and/or its associates on
B
private placement basis against full consideration to be·
utilized for rehabilitation. Thereupon, the BIFR passed
order dated 16.3.2007. Three appeals were filed against
that order. The AAIFR dismissed the appeals and held
that in view of the various orders, the net worth of the c
appellant has tur\ned positive and it can no longer be
treated as sick industrial company. Before the Rent
Control Court, the appellant had neither pleaded nor any
evidence was produced to show that financial stringency
was due to the reasons beyond its control and on that 0
account, the suit premises could not be used from
September, 2001 onwards for the purpose specified in
the lease deeds. Therefore, the so called financial
stringency cannot be construed as reasonable cause
within the meaning of Section 11 (4)(v). [Para 32] [1124-EE
G; 1125-A-E]
3.2. The order passed by the AAIFR has no bearing
on the decision of the issues raised by the respondents
in the context of Section 11(4)(v) of the 1965 Act because
what was required to be considered by the Rent Control
F
Court was whether as on the date of filing the petition the
appellant had ceased to occupy the premises
continuously for a period of six months without
reasonable cause. The improvement in the financial
health of the appellant after many years cannot impinge
G
upon the concurrent finding recorded by the Rerit Control
Court and the Appellate Authority that the respondents
had succeeded in making out a case for eviction under
Section 11 (4)(v) and that there was no reasonable cause
H
1088
SUPREME COURT REPORTS
[2011] 5 S.C.R.
A for the appellant to have ceased to occupy the suit
premises continuously for a period of six months. [Para
33) [1125-E-H]
Shree Chamundi Mopeds Ltd. v. Church of South India
B TrustAssociation (1992) 3. SCC 1: 1991 (1) Suppl SCR 46 ;
GujaratStee/ Tube Co. Ltd. v. Virchandbhai B. Shah (1999)
8 SCC 11: 1999(3) Suppl. SCR 624 ; Carona Ltd. v.
Parvathy Swaminathan and Sons (2007) 8 SCC 559: 2007
(10) SCR 656 - referred to.
c
Case Law Reference:
(2006) 1 KLT 603
approved
Para 13, 26
2004 (3) SCR 518
relied on
Para 20
D
(1948) 1 All. E.R. 922
approved
Para 21
AIR 1973 Born. 210
approved
Para 22
(2004) 3 KLT 326
approved
Para 25
1978 KLT 338
approved
Para 23
E
(2004) 3 KLT 169
approved
Para 24
(2008) 2 KLJ 488
referred to
Para 27
1991 (1) Suppl. SCR 46 referred to
Para 30
F
1999 (3) Suppl. SCR 624 referred to
Para 31
2007 (10) SCR 656
referred to
Para 32
. .
CIVIL APPELLATE JURISDICTION : Civil Appeal No .
•
3911 of2011 .
G
From the Judgment & Order dated 27.7.2009 of the High
Court of Kerala at Ernakulam in RCR No. 134 of 2009.
H
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1089
WITH
C.A. 3912 of 2011.
R.E Nariman, C. Mukund, Ashok Jain, Pankaj Jain, Bijoy
Kumar Jain for the Appellant.
. S. Gopakumaran Nair, C.A. Sundaran, N.M. Mohamed
Ayub, K.N. Madhusoodhanan (for T.G. Narayanan Nair), Romy
Chacko, Jasaswani Mishra for the Respondents.
The Judgment of the Court was delivered by
G.5. SINGHVli J. 1. Leave granted.
A
B
c
2. These appeals are directed against judgment dated
27.7.2009 of the Division Bench of the Kerala High Court
whereby the revisions filed by the appellant against the order
D
passed by District Judge, Ernakulam (hereinafter referred to
as, "the Appellate Authority") under Section 18 of the Kerala
Buildings. (Lease and Rent Control) Act, 1965 (for short, "the
1965 Act") were dismissed and the direction given by lllrd
Additional Munsiff and Rent Control Court, Ernakulam (for
E
short, "the Rent Control Court") for vacating the suit premises
was confirmed.
· 3. A.B. Abdul Khader (predecessor of the respondents)
leased out the suit premises comprised in Suryey Nos.341/1
and 2 situated at Ernakulam village to the appellant for its
godown and office for a period of 10 years with effect from
1.12.1966. After 2 years and about 2 months, the parties
executed two lease deeds dated 3.2.1969, which were duly
registered. For the sake of reference, the relevant portions of
F
the lease deed executed in respect of Survey No.341/1
G
measuring 83 cents are extracted below:
"THIS DEED OF LEASE made on the Third day of
February One Thousand Nine Hundred and Sixty Nine
corresponding to the Fourteenth day of Magha One
H
A
B
c
D
E
F
G
H
1090
SUPREME COURT Rl;PORTS
[2011] 5 S.C.R.
thousand Eight Hundred and Ninety One of the Sakha Era
BETWEEN
A.B.
ABDUL. KHADER
son
of
Alumkaparambli Bava, Indian National, Businessman,
aged Forty five years, residing at Alumkaparampil, Chittor
Road, Ernakulam in the City of Cochin in Ernakulam
District in Kerala State (hereinafter called "the Lessor"
which expression shall unless excluded by or repugnant to
the context include his heirs, executors, administrators and
assigns) of the One Part AND DUNLOP INDIA LIMITED,
formerly THE DUNLOP RUBBER COMPANY (INDIA)
LIMITED, a Company duly incorporated in India having its
Registered office at Dunlop House, 57-B Free School
Street, Calcutta, herein represented by its duly constituted
attorney G.S. Krishna son of Govindarajapuram
Subramaniam, Indian National, Business, Executive, aged
Forty four years, residing at 26, Dr. Hedge Road,
Nangumbakkam in the City of Madras (hereinafter called
"the Lessee" which expression shall unless excluded by or
repugnant to the context include its successors and
ass'igns) of the Other Part.
WITNESSES as follows:-
1.
In consideration of the rent hereinafter reserved and
of the covenants on the part of the Lessee hereinafter
stipulated, the Lessor hereby demises unto the Lessee all
those pieces of parcels of land situate in Ernakulam Town
comprised in Survey Number 341 Sub Division 1 (part)
admeasuring 83 cents equivalent to 33 acres 58.844 sq.
meteres together with the buildings and structures erected
·thereon more particularly described in the Schedule
hereunder written together with all the fixtures, fittings,
pathways, passages, rights and privileges appurtenant
thereto TO HOLD the same unto the Lessee for a term of
ten years from 1st December 1966 paying therefore during
the continuance of the lease a monthly rent of Rs.4:0001-
(Rupees Four Thousand) only on the days and in the
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1091
[G.S. SINGHVI, J.]
· manner and subject as hereunder provided.
(a) xxx
(b) xxx
xxx
xxx
xxx
A
(c) The Lessee shall permit the Lessor or his
B
authorised agents with or without workmen during business
hours to enter upon the demised premises for the purpose
of viewing the condition thereof and from time to time for
the purpose of effecting the necessary repairs and
maintenance as hereunder provided.
c
(d) The Lessee shall deliver up the said demised
premises on termination of the lease in as good order and
condition as they were in at the time when the lease
hereby created commenced subject to determination due
D
to normal wear and tear and defects, if any, for want of,
proper repair and maintenance which is the liability of the · · · ·
lessor as hereinafter mentioned.
2. The Lessor hereby covenants with the Lessee as
follows:-
3.
( a) Subject to the due observance and performance
of the terms, covenants and conditions by the
Lessee herein on their part to be observed and
performed the lessee shall have the right during the
continuance of the lease to use the premises
without interruption by the Lessor or any person
claiming under or in trust for him.
(b) xxx
xxx
xxx
(c)
xxx
xxx
xxx
Provided always and it is mutually agreed by and
between the parties hereto as follows:
E
F
G
(a) Notwithstanding the period of lease herein before
H
A
B
c
D
E
F
G
H
1092
SUPREME COURT REPORTS
[2011) 5 S.C.R.
provided the Lessee shall have the option to terminate the
lease by giving three months notice in writing to the Lessor
at any time during the continuance of this Lease.
(b) The lessees shall have the option to renew the lease
for a further period of ten years at the same rent and other
terms, covenants and conditions as existed during the
initial period of ten years save and except the Clause for
. renewal provided the Lessee gives notice in writing to the
Lessor three months before the expiry of the initial period
of ten years of the Lessee's intention to exercise the
option.
(c) xxx
(d) xxx
(e) xxx
(f) xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
(g) The Lessee shall be at liberty at its own costs to
construct at any time and at any place of the demised
premises counters, strong rooms and safe deposit vaults
and to fix, erect, bring in or upon or fasten to the demised
premises and to alter and rearrange from time to time,
furniture fixtures and fittings which the Lessee may require
for its business such as partition screens, counters,
platforms, shelves, cases, cupboards, heavy safes,
cabinets, lockers, strong room doors, vault doors, cabinets
of any size and weight, steel collapsible gates, ventilators,
grills, shutters, sunblinds, gas and electric fittings, stoves,
light, fans, air conditioners, sinks and other equipment,
fittings, articles and things all of which the Lessee shall be
at liberty to remove at any time at its pleasure, before the
expiration or sooner determination of the tenancy without
objection on the part of the Lessor and the Lessee shall
make good the damage, if any, which may be thereby
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1093
[G.S. SINGHVI, J.]
caused to the demised premises."
A
4. The appellant exercised the option for extension of the
term of lease but did not vacate the premises at the end of
extended period. After the death of A.B. Abdul Khader,
respondent No. 1 became owner of the property comprised in
B
Survey No. 341/1 while respondent No. 2 became owner of the
property comprised in Survey No.341/2. They filed Rent Control
Petition Nos.45 and 146 of 1999 for eviction of the appellant
on the grounds specified in Section 11 (2)(b), 11 (3), 11 (4)(i)
and 11 (4)(v) of the 1965 Act. By an order dated 11.4.2001, the
C
Rent Control Court allowed both the petitions and directed the
appellant to vacate the premi$es. The appeals preferred
against that order were allowed by the Appellate Authority and
the order of eviction was set aside. While reversing the finding
recorded by the Rent Control Court that the appellant had
· ceased to occupy the suit premises continuously for six months
D
without reasonable cause, the Appellate Authority observed as
under:
"I find merit in the submission of the learned counsel for
the appellant that suspension of business activity on
account of extreme financial crunch, at the same time
keeping the unit opeh and alive for operation cannot
amount to cessation of occupation without valid reasons.
Ext. C1 (a) notice conveys eloquently that there was no
intention to abandon possession and the tenant did
continue occupation. Business activity was not being run
on account of peculiar circumstances. Till 2.8.1999 the
premises were kept open and alive for operation. It is
important to note that the employees of the tenant were not
directed not to come to the establishment on any day prior
to 2.8.1999. I am of the opinion that Ext.C 1 (a) read as a
whole can never convey to a prudent mind that there was
cessation of occupation. Physical inability to carry on
business activity on account of financial difficulties and the
closing down of the production in the factories cannot ipso
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fact, in the facts and circumstances of the case, lead to
the conclusion that the management of the tenant (which
had kept the unit open and alive for operation till 2.8.1999)
had ceased to occupy the building till 2.8.1999. Cessation
to occupy had a physical ingredient as also a mental
ingredient. Reading of Ext. C1(a) as a whole, I am unable
to agree that thertl was such objectionable cessation of
occupation. Though it indicates that there was no business
activity and the establishment remained defunct and idle,
there was still the intention to occupy and the hope that it
will be possible to resume even business activity. The
inevitable conclusion flowing from Ext.C1 (a) is that the
employees were continuing to attend the offices in the
petition schedule building ·till 2.8.1999. At any rate, it would
be impossible to come. to a conclusion that there was
cessation of occupation prior to 2.8.1999 though I would
readily agree that there was no business activity in the
petition schedule building for some period of time even
prior to 2.8.1999. I am in these circumstances of the
opinion that Ext. C1 (a), the trump card on which the
landlords place reliance cannot deliver any crucial
advantage or assistance to the landlords in their attempt
to establish cessation of occupation."
The 'Appellate Authority also referred to the
Commissioner's report but refused to rely upon the same by
F recording the following reasons:
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"The inspection by the commissioner was on 10th
September and monsoon season had preceded such
inspection. Some wild growth as indicated in Ext. C1
(assuming that Ext C1 can be legally taken cognizance
of), is not, according to me, sufficient to establish cessation
of occupation. In the light of the very specific statement in
Ext. C 1 (a) that in spite of the extreme financial crunch, the
management had till 2.8.1999 kept the unit open and alive
for operation and that Ext.C1(a) notice was being issued
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1095
[G.S. SINGHVI, J.]
on 2.8.1999 as management was convinced that there is
A
no prospect of running the company immediately must·
definitely convey to the court that there was no cessation .
of occupation prior to 2.8.1999 at any rate. The wild growth
perceived by the commissioner and reported in Ext. C1
cannot in these circumstances tilt the scales in favour of
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the landlords. I am in these circumstances of the opinion
that the learned Rent Control Court erred in coming to the
conclusion that the landlords have succeeded in proving
cessation of occupation for a period of ·6 months
imtnediately prior to the filing of the petitions without c
reasonable cause.· I am unable to concur with the
conclusion of the learned Rent Control Court on this
aspect. I am in these circumstances satisfied that the
challenge raised on this ·ground also deserves to· be
upheld."
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5. Civil Revision Petition Nos.579. and 580 of 2002 filed
by the respondents were dismissed by the Division Bench of
the High Court vide judgement dated 18.12.2006. The High
Court agreed with the Appellate Authority that the evidence
produced by the landlord was not sufficient for recording a
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finding that the tenant had ceased to occupy the premises for .
a continuous period of six months without reasonable cause.
6. During the pendency of the revisions before the High
Court, the respondents filed fresh rent control petitions which
came to be registered as RCP Nos.109 of 2002 and 38 of
2003 for eviction of the appellant under Sectjon 11 (2)(b), 11 (3),
11 (4)(i) and 11 (4)(v). This time, the respondents pleaded that
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the appellant herein has ceased to occupy the premises since
September, 2001 without any reasonable cause. Both the
petitions were allowed by the Rent Control Court vide order G
dated 11.2.2004, which was confirmed by the Appellate
Authority by dismissing the appeals preferred by the appellant.
However, Civil Revision Petition No.368 of 2005 filed by the
appellant was allowed by the High Court vide order dated
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[2011] 5 S.C.R.
A 18.12.2006 and the matter was remitted to the Rent Control
Court for fresh adjudication of the rent control petitions after
giving opportunity to the appellant to file counter statement and
adduce evidence.
8
7. After remand, the appellant filed written statement and
claimed that the petitions filed by the respondents were liable
to be dismissed as iJarred by res judicata because Rent
Control Petition Nos. 45 and 146 of 1999 filed by them on
similar grounds were dismissed by the Appellate Authority and
the High Court. On merits, it was pleaded that due to financial
C constraints, the appellant could not run its business effectively
and profitably and it was declared sick under the Sick Industrial
Companies (Special Provisions) Act, 1985 (for short, "the 1985
Act") by the Board for Industrial and Financial Reconstruction
(BIFR) in Case No.14of1998 and the appeal filed against the
D order of BIFR was pending before Appellate Authority for
Industrial and Financial Reconstruction (AAIFR). It was also
averred that due to financial crisis, the staff strength was
reduced to bare minimum but there was no cessation of
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occupation of the suit premises.
8. On the pleadings of the parties, the Rent Control Court
framed the following issues:
"(1)
Whether the petition is barred by resjudicata and
also u/s.15 of the Act?
(2)
Whether RW1 is having any authority to represent
the respondent?
(3)
Whether there is a commercial lease between the
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parties as alleged?
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(4)
Whether the Petitioners are entitled for an order of
eviction u/s.11 (2)(b) of the Act?
(5)
Whether the Respondent ceased to occupy the
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1097
[G.S. SINGHVI, J.]
petition schedule buildings continuously for six
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months?
(6)
Whether there is any reasonable cause for the
cessation of occupation if any?
(7)
Whether the Petitioners are entitled for an order of
8
eviction u/s 11(4)(v) of the Act?
(8)
Relief and costs?"
9. After considering the pleadings and evidence of the c
parties, the Rent Control Court held that the petitions filed by
the respondents· were not barred by ~es judicata and Section
15 of the 1965 Act cannot be invoked for denying reli.ef to them
because two sets of rent control petitions were based on
different causes. However, the. respondents' plea that the
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appellant was in arrears of rent was rejected on the ground that
no evidence had been produced by them to prove the same.
The Rent Control Court then considered the question whether
the appellant had ceased to occupy the suit premises since
September, 2001 without reasonable cause and answered the
same in affirmative. The Rent Control Court referred to the
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· evidence produced by the parties including the reports Exhibits
C1 and C2 produced by Advocate Commissioners PW2 and
PW3 and recorded the following observations:
,.
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"(i) From Ext.C1 report filed by PW2 it can be seen that
the two entrance gates on the northern side of the petition
schedule property in O.S. 109/02 is found rusted and
closed. The boundary fencing on the northern side is found
damaged.
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(ii) The land surrounding the side petition schedule building
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is fully covered with grass and shrubs and PW2 the
commission even found it difficult to walk through the
premises. The sheds in the said property were seen in
dilapidated condition and the commissioner could not go
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near to the shed as it was covered with tall bushes and
shrubs.
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(iii) The eastern wall of the petition scheduled building in
· RCP 109/02 had to rusted shutters which was seen closed.
(iv) It is also reported that the commissioner could not enter
into the buildings as it was closed. On looking through the
glass window PW2 could see some furniture inside the
building which are full of dust, damaged and unfit for use.
Though the service line of electric connection to the petition
schedule building was there commissioner verified and
found that the electric connection being disconnected.
(v) PW3 is the advocate commissioner who had inspected
the petition schedule building RCP No.38/03 and filed
Ext.C2 report it can be seen that the petition schedule
. building in RCP 38/2003 was lying closed at the time of
both the inspections made by PW3. The commissioner has
also noted the notice fixed in the front shutter of the petition
schedule building by Sri A.K. Agarwal Company Secretary
on 1.10.2001 stating that the Respondent company is a
sick industrial company under the Sick Industrial
Companies (Special Provisions) Act and operations at
Kochi has been suspended w.e.f. 1.10.2001 onwards. It
is also mentioned in ex.C2 that the front shutters and the
shutt~rs provided at the eastern side are full of dust and
the same were rusted due to non use, and the entire
compound around the petition schedule building are full of
bush and the bushes are seen at some places grown on
to the petition schedule building and some other places
grown to the roof of petition schedule building.
(vi) The commissioner has also noted five calendars for
year 2001 seen inside the rooms in the petition schedule
building. PW3 also has noted that the switchboard
provided at the eastern and western wall of the petition
schedule building were not having electricity supply. It is
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1099
[G.S. SINGHVI, J.]
also noted that the four iron gates provided for the
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compound were covered with dust and rust due to non use.
(vii) Even though the condition of the petition schedule
buildings happened to be as noted by PW2 and PW3 to
a limited extent to non-maintenance and repairs it cannot
8
be found that it happened only due to non-maintenance and
repairs ..
(viii) The calendars for the year 2001 noted by PW3 inside
the petition schedule building in RCP No.38/03 and the
notice dated 01.10.2001 affixed at the front shutter of the
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same building clearly shows that both the petition schedule
buildings were not been opening from 1.10.2001 towards
till the inspection date. Since the petition schedule buildings
were not opened since September, 2001 the inability of
the Petitioner to carry out the repairs and maintenance also
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is to be looked into."
(emphasis supplied)
10. The Rent Control Court then considered the plea of the
appellant that on account of pendency of the proceedings under
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the 1985 Act, the staff strength was reduced to bare minimum
but discarded the same on the ground that staff attendance
register, muster roll, wages register maintained in the office as
also the document showing purchase and sale of the goods,
payment of electricity charges etc. had not been produced
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showing payment of the dues since September, 2001 and
observed:
"The specific case of RW1 is that due to the proceedings
under the provisions of Sick Industrial Companies (Special
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Provisions} Act, the staff strength of the Respondent
company was reduced to bare minimum at the petition
schedule buildings. According to RW1 even though there
were such proceedings respondent was functioning in tne
schedule buildings with minimum staff. During cross
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[2011] 5 S.C.R.
examination RW1 admitted that the staff attendance
register, muster roll wages register etc are maintaining
in the petition schedule buildings. She also admitted that
they are maintaining stock register in the petition
schedule buildings. But none of there documents are
produced before court. According to RW1 she omitted to
produce these documents. Had these documents for the
relevant period come in illegible/. the details regarding the
strength of the staff and the business being carried on is
the petition schedule buildings would have been revealed.
She also admitted that documents are maintained
regarding the purchase and sale done in the petition
schedule buildings but those documents are a/so not
produced before court. . . . . . . . . . . . . . . . The specific case of
PW1 is that the electric connection was disconnected
more than 1 ~ years before. But according to RW1 the
electricity connection was disconnected only two months
prior to her examination before court. If there was actually
electric supply to the petition schedule buildings and the
Respondents had paid the electricity charge definitely RW1
could have produced the electricity bill pertaining to the
petition schedule buildings. Though RW1 stated that she
can produce the electricity bill from 2001 September
onwards pertaining to the petition schedule buildings
neither of them has been produced till now. From all these
it can be seen that the Respondents were not occupying
the petition schedule buildings from 2001 September
onwards, and they had ceased to occupy the petition
schedule buildings continuously for more than six
months.
According to RW1 respondent could not conduct the
··
business in full swing in the petition schedule building due
to BIFR and AAIFR proceedings. Ext.89 is the order of
AAIFR, New Delhi in appeal No.1/02 wherein the
Respondent is the appellant. On perusal of Ext.89 it can
be seen that several reliefs and concessions were given
DUNLOP INDIA LIMITED v. A.P. RAHNA AND ANR. 1101
[G.S. SINGHVI, J.]
to the Respondent company by the AAIFR. But as per
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ext.89 no restriction is seen imposed on the work of
respondent company all together or particularly in the
schedule buildings at Cochin ......................................... As
already observed respondents could not produce any of
the mandatory prescribed registers such as stock register,
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day book, muster roll, attendance register wages register
etc. to show that any business were being carried out in
the petition schedule buildings even with minimum staff.
Even it was specifically put to RW1 that due to the
proceedings before BIFR and AA/FR, whether the board c
of directors was resolved to reduce the staff strength she
answered that the staff were told not to come and they
have agreed for the same. It is something unbelievable.
RW1 has produced Ext.B13 series to B25 series invoices
to show that they are conducting business to the
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. scheduled property. But on going through ext.B13 series.
to ext.B25. series it cannot be found that those
transactions were made through Ka/oar Office where in
the petition schedule building situates as these invoices
were given to the Chennai office of respondent. The
learned counsel for the Petitioner has pointed out that in
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ext.811 series and 812 series after the Chennai address
of the Respondent company it is seen typed in another
machine in Ext.811 series and written in another
handwriting in Ext.812 series, "through Kaloor Office
Cochin". The same and address of the purchasing dealer
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in all these documents are the Chennai address of the
Respondent company. Ext.811 series to ext.825 series
cannot be relied on to show that business was being
conducted in scheduled buildings.