J.A. Patil, J.
1. This is a suit for declaration of title, possession and arrears of rent together with incidental prayers. The plaintiffs are the owners of the suit land which is a large plot of land, admeasuring 25034.88 sq. metres, bearing Survey No. 61 Hissa Nos. 1 to 6, Survey No. 62/ 1 to 2, Survey No. 63/ 1 to 11, Survey No. 64/ 1, 4-A, 9 and 10 and Survey No. 65/ 3 to 5 situate at Marol Maroshi Road, Andheri, Mumbai. The defendants are a Co-operative Society registered under the Maharashtra Co-operative Societies Act. By an indenture of lease dated 29th July, 1972, made between the plaintiffs and defendants, the plaintiffs demised the suit land together with the buildings standing thereon or which may be constructed upon it for a term of 98 years commencing from 1st January, 1970, for a monthly rent of Rs. 9000/ payable on or before 10th of each calendar month. The said indenture of lease is duly registered and it contains certain terms and conditions. Besides the payment of rent, as stated above, the lessees agreed to insure the buildings constructed on the suit land together with full insurable value against loss or damage by fire in the joint names of the lessees and the lessors and to produce the insurance policy and receipt of payment of premium. Condition No. 4(a) is to the effect that if the rent or any part thereof remains unpaid for a period of two months after the date on which the same ought to be paid or if the lessees made or commit a default in performance and/or observance of any of the convenants and conditions or if such defaults continues and is not remedied for one calendar month from the date of the service of notice in writing, it shall be lawful for the lessors to determine the lease in every respect and to re-enter upon the said suit land. The Indenture of lease provides that the suit land can be used for the purpose of commercial, industrial, garages, warehouses, godowns or for any other purpose, as may be permitted by law. At the expiration of or determination of the lease, the lessees were to deliver to lessors the suit land together with the buildings and structure standing thereon. It was further agreed that the lessors shall pay to the lessees compensation as may be mutually agreed upon between them for the reasonable value of the structures or buildings on the suit land. In the event of the lessors and lessees not being able to agree upon or arrive at a reasonable value of the buildings, it was agreed to call for a report of an independent Architect.
2. The plaintiffs have alleged that the defendants, as the lessees, committed breach of their obligations on two counts. Firstly, they failed and neglected to pay to the plaintiffs rent in respect of the suit land payable for the months of April, May and June, 1976 aggregating to Rs. 27,000/- and thereby committed a breach of Clause 2(a) of the Indenture of the lease. Secondly, the defendants failed and neglected to insure the building structure upon the suit land as stated in Clause 2(h) of the indenture of lease. The plaintiffs therefore, sent a notice dated 13th July, 1976 to the defendants and pointed out the aforesaid two breaches and called upon them to pay to the plaintiffs the arrears of rent of three months and also to ensure the buildings upon the suit land and produce for the plaintiffs' inspection the insurance policies and receipts of payment of premia. The plaintiffs have alleged that the defendants after receiving the notice, did not comply with the demands made therein and failed to remedy the breaches pointed out to them. The plaintiffs, therefore, by their second notice dated 21st September, 1976 terminated the lease and decided to exercise the power of re-entry. They called upon the defendants to deliver possession of the suit land together with the buildings and structures thereon. According to the plaintiffs they are always ready and willing to perform their obligations under the Indenture of lease but the defendants committed breach of their obligations, as stated above, and thereby entitling the plaintiffs to exercise their right to re-enter upon the suit land. The plaintiffs filed the present suit on 14th January, 1977 and prayed for a declaration of their title to the suit property and also for possession of the suit land together with buildings and structures thereon. They have, further, prayed for recovery of the arrears of rent to Rs. 54,000/- at the rate of Rs. 9000/- per month for the period from April, 1976 to September, 1976 and compensation of Rs. 60,000/- at the rate of Rs. 15,000/- per month with interest thereon for the period from October, 1976 to January, 1976 with interest thereon. The have further prayed for a mandatory injunction, enjoining the defendants to appoint an Architect for the purpose of making valuation of the building and construction in accordance with Clause 2(m) of the Indenture of lease.
3. The defendants have resisted the suit and pointed out that the dispute in question is between the landlords and tenants or licensor and licensee and that the same is covered by the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act. They have further pointed out that they have already filed R.A.N. Application No. 1297/SR of 1976 and the same is pending. In view of this position, the defendants contend that this Court has no jurisdiction to entertain and try this suit. As regards the lease deed, the defendants do not deny or dispute the execution thereof. However, they contend that the same has not been registered in view of the plaintiffs failure to obtain requisite certificate under the provisions of the Income Tax Act and Urban Land (Ceiling and Regulation) Act, 1976. Therefore, according to the defendants the plaintiffs cannot rely upon the lease deed for want of its non-registration. The defendants have further contended that at all material times, the intention of the parties was to create the relationship of landlord and tenant or licensor or licensee. The buildings on the plot have been constructed for residential/commercial purpose and therefore, the same are covered by the provisions of the Bombay Rent Act. The defendants have averred that the lease deed is a sham and bogus document. According to them, the plaintiffs are entitled to only to the standard rent in respect of the suit property. They have pointed out that on the basis of the application filed by them in the Small Causes Court, the said Court has fixed interim rent of Rs. 2000/- per month and the defendants have duly deposited the same. As regards the alleged breach of insurance condition, the defendants have submitted that during the relevant period, the suit property was in the process of being developed and therefore, they insured the buildings upto the year 1972. After the construction of various buildings was completed the occupants or members of the defendants society separately insured their respective units or flats in their possession with the result that the entire suit property has been fully and properly insured. Thus according to them there has been full compliance of the conditions regarding insurance of the buildings on the suit land. Thus the defendants denied to have committed both the breaches attributed to them. They have, therefore, contended that the plaintiffs are not entitled to any of the reliefs claimed by them and that the suit is liable to be dismissed.
4. In view of the rival pleadings, following issues came to be framed. I have recorded my findings against each issue.
Issues Findings.1. Whether this Court has jurisdictionto entertain and try this suit? Yes.2. Whether the alleged indenture of leasedated 29th day of July, 1972 is sham andbogus document and in fact the intentionof the parties was to create monthly tenancyas alleged in paragraphs 8 and 9 of the written statement? No.3. If the answer to the Issue No. 2 hereinabove is in negative, whether theplaintiffs prove that the defendants havecommitted breach of their obligationsunder the said lease and the plaintiffs areentitled to terminate the lease and exercisetheir power to re-entry, as alleged in paragraph 8 of the plaint? Yes.4. Whether the defendants have failed and neglected to observe and perform their partof the obligations under the lease? Yes.5. Whether the defendants have insured thebuilding as per the agreement as alleged inpara 10 of the written statement? No.6. Whether the defendants are liable to payonly standard rent as alleged in para 10 ofthe written statement? Does not arise.7. Whether the defendants are bound and Rs. 27,000/- andliable to pay to the plaintiffs the sum of Rs. 36,000/-Rs. 54,000/- with interest and Rs. 60,000/ with 9% interestwith interest or any other sums as alleged per annum.in paragraphs 12 and 13 of the plaint?8. What reliefs, if any? Suit decreed a perthe order below.
REASONS
5. In support of their case, the plaintiffs have examined plaintiff No. 1 Hector Hoshang Mehta. The defendants on the other hand have examined two witnesses, namely, Shankar Gopal Lad, who was at the relevant time working as Rent Collector with the defendants society and Jayant Jagmohandas Jariwala, who is a member and Chairman of the defendants society. In addition to this oral evidence, both the parties have led some documentary evidence to which reference will be made as and when required in due course of this judgment.
6. The defendants do not dispute the execution of the lease deed dated 29-7-1972. The original lease deed was produced by the plaintiffs and by consent of the other side, a true xerox copy thereof has been marked as Exh. P-6 and the original is returned. The contention of the defendants in their written statement is that the plaintiffs cannot rely upon the lease deed as it is not registered one. It may be noted that the suit was filed on 14-1-1977. The defendants filed their written statement on 28-3-1977. The endorsement on the lease deed shows that it was presented for registration in the office of the Sub-Registrar on 3-8-1972 and it was actually registered on 13-9-1978 i.e. after about six years. Any way, in view of the fact that the lease deed has been registered, the defendants contention in this respect does not survive.
7. The first contention raised by the defendants is to the jurisdiction of this Court to entertain and try this suit. According to them, the suit discloses a dispute between landlords and tenants or licensors and licensees and that the same is, therefore, governed by the provisions of the Bombay Rent Act. The defendants have also pointed out that they had filed an application being R.A.N. Application No. 1297/SR of 1976 in the Small Causes Court for fixation of standard rent in respect of the suit property. Both the above mentioned witnesses of the defendants, however, do not know as to what was the result of that application. They also do not know whether that application is still pending in the Small Causes Court. Shri Merchant, the learned Advocate for the defendants however, fairly stated before the Court that the said application filed by the defendants came to be dismissed for default.
8. The lease deed Exh. P-6, shows that earlier there was a lease of the suit land in favour of the builder on 29-5-1969. As per which M/s. Asian Builders took possession of a substantial portion of the suit land and commenced construction of buildings and structures thereon. Thereafter, the said builders sold on ownership basis several units in the buildings constructed upon the suit land and the unit holders thereafter formed a co-operative society. Accordingly, the defendant society came into existence and under the lease deed Exh. P-6, the plaintiffs gave lease of the suit land to the defendants. M/s. Asian Builders are a consenting or confirming party to the lease deed. The lease deed contains several covenants one of which is contained Clause 2(1), whereby, the lessees i.e. defendants covenanted with the lessors 'Clause (1)' :---
(1) To use or permit to be used the buildings or structures for the time being forming part of the said premises or any part or parts of such buildings or structures for industrial and/or commercial purposes, garages and/or warehouses and godowns and/or for any other purposes whatsoever and howsoever as are permitted by law PROVIDED HOWEVER that such permissible user will not be made without obtaining the prior approval, if any, of public authority or authorities required under the law.'
9. Shri Diwan submitted that Clause 2(1) of the lease deed excludes the operation of the Bombay Rent Act to the suit property. It may be noted that the suit land is a non-agricultural land which admittedly belongs to the plaintiffs. The galas in the buildings constructed thereon however, belong to the unit holders who are the members of the defendants society. Section 5(8) of the Bombay Rent Act defines the term 'premises' as under:---
(8) 'premises' means---
(a) any land not being used for agricultural purposes,
(b) any building or part of a building let separately (other than a farm building) including---
(i) the garden, grounds, garages and out-houses, if any, appurtenant to such building or part of a building,
(ii) any furniture supplied by the landlord for use in such building or part of a building,
(iii) any fittings affixed to such building or part of a building for the more beneficial enjoyment thereof, but does not include a room or other accommodation in a hotel or lodging house;
Part II of the Bombay Rent Act, deals with the residential and other premises. Section 6(i) in substance states that Part II shall apply to the premises let for residence, education, business, trade or storage, in areas specified in Schedule I. Schedule I enumerates various places including the City of Bombay and the Bombay Suburban District. It will therefore, at the first blush be seen that the provisions of the Bombay Rent Act would apply to the suit property. Shri Diwan however, relied upon two decisions of the Supreme Court which support his contention that the suit land not having been let for the purpose of residence or business, the provisions of the Bombay Rent Act will not be applicable to the suit property. In Osman Fakir Mahomed Divecha v. Ali Akbar Javed Sadakya & another, : [1970]2SCR118 , it was held that where a lease of open land situated in the Bombay Suburban District was made for constructing 'buildings of every description howsoever' from time to time, the purpose for which the land was demised clearly was for constructing buildings of any description and not for constructing buildings for residence, education, business, trade or storage. It was, therefore, held that the land demised, though 'premises' within the meaning of section 5(8), was not 'premises within the meaning of section 6(1) of the Rent Act. In a subsequent decision in Bai Chanchal v. Syed Jalaluddin, : [1971]2SCR171 , the Supreme Court interpreted the word 'business' as used in section 4(2) of the Bombay Rent and Restriction Act, 1939, said section defines the term 'premises' as meaning---
(a) any building or part of a building let separately for any purpose whatever, including any land let therewith or
(b) any land let separately for the purpose of being used principally for business or trade.
While rejecting the submission that the purpose of lease to construct houses and let them on rent, would constitute the use of the land for the purpose of business, the Supreme Court observed 'we do not think that the word 'business' or 'trade' used in the definition of 'premises' in section 4(2)(b) of the Act, comprehends within it a lease which is merely for constructing houses'. The Supreme Court pointed out that the lease was merely a permissive one, giving a right to the lessees to construct house and let them out or to use the land in any manner. It was, therefore, held that the purpose of the lease was expressed in this way, it was impossible to hold that the principal use, to which the land was to be put by the lessees, was business or trade.
10. Applying the ratio of the above mentioned two decisions, it will have to be held that the suit land was not let to the defendants for the purpose, stated in section 6(1) of the Bombay Rent Act.
11. It is important to note that what is given on lease to the defendants is the suit land as described in the first schedule of the lease deed and not the buildings and structures which were constructed thereon by M/s. Asian Builders. The plaintiffs are the owners of the suit land and not the structures and building thereon. They belong to the members of the defendant society who purchased the galas in those building from the builder. Therefore, applying the ratio of the above mentioned two decisions, it will have to be held that the suit land, though it is 'premises' within the scope of section 6(1) of the Bombay Rent Act, has not been let 'for residence, education, business, trade or storage'. It was let for the purpose of constructing buildings which purpose is not contemplated by section 6(1). Hence, the provisions of the Bombay Rent Act do not apply to the suit lease. Consequently, the objection regarding the jurisdiction of this Court cannot be sustained. Reference may also be made to K.M. Motwani v. Albert Sequeira, A.I.R. 1960 Bom 18, wherein it was held that the jurisdiction conferred upon the Small Causes Court under Chapter VII the Presidency Small Causes Act, is a very special and limited jurisdiction entitling the parties to recover possession by a summary procedure. It was further held that there is nothing to prevent a party from obtaining possession in the ordinary Court of the land if he has a right to possession under the ordinary law. In view of the above discussion, the second contention of the defendants that the intention of the parties at the time of lease was to create the relationship of landlord and tenant or licensor and licencee and that therefore, the lease deed is sham and bogus, cannot be accepted. Hence, finding on Issue No. 1 is in the affirmative and that on Issue No. 2 in the negative.
12. The plaintiffs are seeking 'vacant possession of the immovable property mentioned in paragraph 2 of the plaint and more particularly, described in Exhibit 'A' to the plaint'. In both, what is mentioned or-described is the suit land and not the buildings standing thereon. The plaintiffs however, contend that they have become entitled to get possession of the buildings and structures. The plaintiffs have therefore, also prayed for appointment of an architect for making valuation of the structures and buildings as mentioned in Clause 2(m) of the lease deed. As per the said clause the 'lessors shall pay to the lessees compensation as may be mutually agreed upon between the parties'. Now the ground for claiming possession is that the defendants have committed a breach of their obligation under the lease in two ways. First that they have failed and neglected to pay rent for the months of April, May and June 1976 and second that they have neglected to insure the buildings constructed on the suit land against loss or damage by fire. It will be proper to consider these two breaches separately.
13. The plaintiffs had served the defendants with a notice dated 13-7-1976 Exh. P-7 and demanded inter alia arrears of three months rent for April, May and June 1976 within one month. The defendants witness Jariwala has admitted in para 8 of his examination-in-chief the receipt of this notice and stated that after this notice the defendants filed an application in the Small Causes Court for fixation of standard rent. By the notice Exh. P-7 the defendants were given one month's time to remedy the aforesaid breaches. However, as the defendants did not remedy those breaches, nor did they give any reply to the plaintiffs. Hence, the plaintiffs by their second notice dated 21-9-1976 Exh. P-8 terminated the lease and called upon the defendants to deliver forthwith possession of the suit property. The defendants did not comply with this demand also and instead on 6-10-1976 filed an application being R.A.N. Application No. 1297/SR of 1976 in the Small Causes Court for fixation of standard rent and informed the plaintiffs by their letter dated 6-10-1976 about it. (Exh. P-9). There is no dispute that the said Court then fixed the interim standard rent at Rs. 2000/- per month and that the defendants thereafter, deposited Rs. 14,000/- towards interim rent of 7 months. The application was however, dismissed for default on 2-8-1977. Before that the plaintiff filed the present suit in January 1977 and also took out Notice of Motion No. 98/1977, praying for restraining the defendants from creating any tenancy or leave and licence and parting with possession of the suit property. The said Notice of Motion was disposed of in terms of the minutes of order dated 17-3-1977. The defendants agreed and were directed to pay, in addition to Rs. 14,000/- which they had deposited in Small Cause Court, a sum of Rs. 94,000/- by instalments to cover the 12 months rent from April 1976 to March 1977. The defendants further undertook to pay further rent at the rate of Rs. 9000/- per month fort the period from April, 1977 on or before 15th day of each successive month. The plaintiffs were given liberty to withdraw the rent. The order clarified that it was made without prejudice to the rights of the parties. It may be noted that under Clause 4(a) of the lease deed if rent remains unpaid for two months, whether the same is formally or legally demanded or not, the lessor gets a right to determine the lease if the default is not remedied in one month. In the instant case, the defendants were admittedly in arrears of rent for the months of April, May and June 1976 when a demand thereafter was made by the plaintiffs on 13-7-1976. The same was not paid within one month's time given by the plaintiffs. Hence, the plaintiffs were right in determining the lease and call upon the defendants to deliver possession. The filing of an application for fixation of standard rent by the defendants is of no consequence and that did not save the situation since it was dismissed for default on 2-8-1977. It will thus be seen that there has been forfeiture of the lease under Clause (g) of section 111 of the Transfer of Property Act.
14. Shri Merchant, the learned Advocate for the defendants however, pressed into service section 114 of the Transfer of Property Act, which gives the lessee a relief against forfeiture for non-payment of rent. It reads as under :---
'114. Relief against forfeiture for non-payment of rent.---Where a lease of immovable property has determined by forfeiture for non-payment of rent, and the lessor sues to eject the lessee, if at the hearing of the suit, the lessee pays or tenders to the lessor the rent in arrears, together with interest thereon and his full costs of the suit, or gives such security as the Court thinks sufficient for making such payment within fifteen days, the Court may, in lieu of making a decree for ejectment, pass an order relieving the lessee against the forfeiture; and thereupon the lessee shall hold the property leased as if the forfeiture had not occurred.'
This section applies where the forfeiture has taken place on the ground of non-payment of rent. The section, no doubt gives discretion to the Court to give relief to the lessee even though there is forfeiture of the lease. But then the lessee has to fulfil certain conditions before he can invoke the Court's discretion in his favour. Those conditions are that at the time of hearing of the suit the lessee has to pay or tender to the lessor the rent in arrears together with interest thereon and his full costs of the suit or give a security to the satisfaction of the Court for making such payment in 15 days. The relief against forfeiture is an equitable relief and can be availed of by the lessee upon his complying with the aforementioned conditions.
15. In the present suit, pursuant to the minutes of the order dated 17-3-1977 the defendants have been depositing in the Court rent at the rate of Rs. 9000/- p.m. and the plaintiffs have withdrawn the same from time to time. The defendants' witness Shankar Gopal Lad whose evidence was recorded in part on 12-6-2001 has stated in para 3 of his deposition that the defendant society has paid rent upto the end of June 2001. This version is not challenged in the cross-examination. No grievance is made and no instance is pointed out by the plaintiffs that after passing of the order dated 17-3-1977, the defendants have not been regular in depositing the rent in the Court or that they have not paid the rent uptodate. The question therefore, is whether under these circumstances the defendants should be given relief against forfeiture. Shri Merchant submitted that the right of forfeiture given under the lease is only a lever. He pointed out that the defendants are not chronic defaulters and that their conduct is not of such type as to deny them the discretionary relief against forfeiture. He relied upon R.S. Lala Pradumna Kumar v. Virendra Goyal, : [1969]3SCR950 , wherein it was observed :---
'The covenant of forfeiture of tenancy for non payment of rent is regarded by the Courts as merely a clause for securing payment of rent and unless the tenant has by his conduct disentitled himself to equitable relief, the courts grant relief against forfeiture of tenancy on the tenant paying the rent due, interest thereon and costs of the suit.'
It was also held that failure of the tenant to avail of the opportunity or passing of a decree of eviction against the tenant by the Court of first instance does not take away the jurisdiction of the Appellate Court to grant the equitable relief against forfeiture. Shri Merchant also relied Ladhuram v. Chimniram : AIR1947Bom86 , wherein it was held that the lessee can apply for the relief against forfeiture even in execution.
16. As against these, Shri Diwan the learned Advocate for the plaintiffs relied upon following decisions. In Indralok Studio Ltd. v. Smt. Shanti Devi, : AIR1960Cal609 , the defence was denial of default or non-payment of rent. But it was found that no rent had been paid by the defendant except some small and insignificant payments which in no way were sufficient to liquidate the arrears of rent. Under these circumstances, the Court declined to grant the equitable relief against forfeiture to the defendant. In Mahendralal v. Samastipur Central Sugar Co. Ltd., I.L.R. 1968 Cal 117, it was held that the relief being discretionary in nature, the Court would be reluctant to exercise its discretion in favour of the lessee who disputes the validity of the claim for arrears of rent, resulting in forfeiture of the lease.
17. It will thus be seen that the relief under section 114 being an equitable relief, the Court has to apply its mind to the facts of the case and decide whether it will be proper to exercise its discretion in favour of the lessee or lessor. In the instant case, the defendants did raise a dispute about the standard rent as according to them the provisions of the Bombay Rent Act are applicable to the suit land. It is also true that they were in arrears of rent of Rs. 27,000/- for the months of April, May and June 1976. But they got the interim standard rent fixed at Rs. 2000/- p.m. from the Small Causes Court and went on depositing the same in the Court. Even in this suit, the defendants have been depositing the rent as per the order dated 17-3-1977. It is true that the defendants did not pay the arrears of rent of Rs. 27,000/- within one month after the receipt of the notice. But it cannot be ignored that as per Clause 4(d) of the lease deed, they had already paid to the plaintiffs a security deposit of Rs. 47,500/- out of which Rs. 27,000/- were by way of advance rent. Shri Merchant pointed out that the plaintiffs are the owners of the suit land only but the buildings constructed thereon belong to the defendants who have paid more than Rs. 27 lakhs to the builders. It appears that there are in all six buildings on the suit land. The number of the galas sold to the members is 148. Shri Merchant, therefore, submitted that under these circumstances there will be a tremendous loss and hardship to the defendants in case the Court does not exercise its discretion in their favour. Shri Diwan on the other hand contended that the defendants conduct dis-entitles them to the relief against forfeiture. But I do not find that the defendants conduct is so bad and the facts on record do not disclose extreme case as to warrant refusal of the relief under section 114 to the defendants. It is true that the defendants have not paid the interest on the arrears of rent i.e. Rs. 27,000/- and costs of this suit but there is no difficulty about it since Shri Merchant made a statement that the defendants are ready to pay the interest and costs of the suit.
18. The second breach alleged against the defendants is that they failed and neglected to insure the buildings constructed on the suit land against loss or damage by fire. Clause 2(h) of the lease deed reads as under :
h) To insure the building or buildings constructed on the said premises (excluding the foundation and plinth to their full insurable value), against loss or damage by fire in an insurance office of repute in Bombay to be approved of by the lessors, in the joint names of the lessees and the lessors or otherwise as may be necessary, and to produce to the lessors the Insurance Policy and the receipt of payment of premia and in case of destruction or damage, to lay out the insurance moneys in re-building or reinstating the building or buildings destroyed or damaged, making up themselves the deficiency therein.
Clause 4(a) of the lease deed inter alia states that if the lessee makes default in performance or observance of any of the convenants and conditions and if such default is not remedied for one calendar month after the receipt of the notice then it shall be lawful for the lessors to determine the lease and re-enter upon the premises. There is no dispute of the fact that there has been no strict compliance of the condition in terms of Clause 2(h). But the defendants have submitted that after the buildings were completed various occupants or members of the defendant society separately insured their respective units with the result that the entire property was fully and properly insured.
19. As stated earlier, there are six buildings and 148 galas upon the suit land. Jariwala D.W. 2 has stated that upto 1971-72 the Asian Builders, who developed the property, used to take insurance in respect of the constructions made by them. He also stated that after 1972 the member of the society individually started getting their respective galas insured as it was mandatory for them to do so under the Factories Act and the Bank also insisted on their obtaining insurance for security of the hypothecated property. In para 15, he stated that in order to fulfil the agreement, the society decided in 1998 to take insurance policies. The defendants have produced two policies. Exh. D-1 is an insurance policy in the name of 'Bank of India Versova Br. A/c M/s. Sycon, C-6, Nand Dham Industrial Estate'. It is for the period from 12-12-1994 to 11-12-1995 in respect of one building with machinery and stock. Exh. D-2 is an insurance policy in the name of the defendants for the period from 26-2-2001 to 25-2-2002 and it is in respect of one building only.
20. It is thus clear that there is no compliance or observance of Clause 2(h) of the lease deed in three respects. The first is that all the buildings have not been insured and the second is that the insurance policies are not in the joint names of the lessors and the lessees. The perusal of Clause 4(gh) however, shows that it was not absolutely necessary that the policy must be in the joint names of the lessors and lessees. This is clear from the words 'otherwise as may be necessary'. The third condition is that the defendants did not produce the insurance policy and receipts of payment of premia. Clause 4(a) of the lease gives a right to determine the lease and re-enter upon the suit property in case the lessees fail to remedy the breach even after one month's notice given by the lessors for that purpose. Section 114-A of the Transfer of Properties Act contemplates such opportunity being given to the lessee to remedy the breach and bars a suit for ejectment of the lessee if such an opportunity is not given to the lessee. The section reads :---
114-A. Relief against forfeiture in certain other case.---Where a lease of immovable property has determined by forfeiture for a breach of an express condition which provides that on breach thereof the lessor, may re-enter no suit for ejectment shall lie unless and until the lessor has served on the lessee a notice in writing---
(a) specifying the particular breach complained of; and
(b) if the breach is capable of remedy, requiring the lessee to remedy the breach;
and the lessee fails, within a reasonable time from the date of the service of the notice, to remedy the breach, if it is capable of remedy.
Nothing in this section shall apply to an express condition against the assigning, under-letting, parting with the possession, or disposing of the property leased, or to an express condition relating to forfeiture in case of non-payment of rent.
It will thus be seen that the substance of the relief provided by this section is the opportunity to remedy the breach and not the relief against forfeiture like the one given by section 114.
21. Shri Merchant submitted before me that the plaintiffs were never serious about the condition regarding insurance. Therefore, according to him breach of this condition is not such a breach to justify the determination or forfeiture of the lease. The emphasis of Shri Merchant is on the fact that the plaintiffs are owners of the suit land only and not the buildings constructed thereon. What Shri Merchant wants to suggest is that the plaintiffs are really not concerned with the fact whether the buildings constructed on the demised land are insured or not and whether the insurance is in the joint names of both the plaintiffs and defendants. The plaintiffs are not going to suffer anything nor will they be put to any loss on account of the defendants failure to insure the buildings on the suit land against loss or damage by fire. Even supposing a building on the suit land is destroyed by fire, the loss will of the defendants and not of the plaintiffs.
22. I have given a thoughtful consideration to the submissions of Shri Merchant and I think that it is not possible to accept the same for more than one reason. In the first instance, the condition of insurance is not a question of propriety or otherwise but a question of fulfilling the promise by observing a particular conduct. Both the parties by their mutual consent, having expressly agreed upon a particular condition; it is not proper for the Court to consider the question of its propriety or otherwise. Secondly, the defendants were fully aware of the requirements of the covenant stated in Clause 2(h) and they also knew from Clause 4(a) what serious consequences will follow in case the convenant which cast an obligation upon them, was not complied with. It appears that the defendants never took the Clause 2(h) of the lease deed with due seriousness and conveniently ignored to insure the buildings on the suit land in terms of the said clause. They did not care to remedy the breach even after the receipt of the statutory notice under section 114-A. It is not their case in the written statement that the condition regarding insurance is unreasonable, illegal or incapable of being remedied. Therefore, their failure in this respect cannot be justified or executed and the legal consequences of the breach of the express condition regarding insurance will follow.
23. The defendants are under a blissful impression that there was no need for them to comply with the said condition since the individual gala owners got their premises insured and thus there has been sufficient or substantial compliance of the condition. The relevant date for ascertaining the compliance or non compliance of the condition of insurance is the date i.e. 13-7-1976 on which the plaintiffs brought to the defendants' notice the breach in this respect and called upon them to remedy the same 'at or before the expiry of the month next after the current month.' It is pertinent to note that the defendants did not care even to reply this notice; leave apart the compliance. After the termination of lease what they informed to the plaintiff was that they had filed an application for fixation of standard rent. D.W 2 Jariwala now states before the Court that after 1972 the gala holders individually started taking insurance policies of their respective galas as it was mandatory to do so under the Factories Act. If that was so why the plaintiffs were not then informed accordingly. No documentary evidence is produced before the Court to prove this fact. I am not shown any provision under the Factories Act, 1948 or the Rules framed thereunder by the State Government which require the factory owners to insure the premises of their factories. Assuming that there is any such provision how can it be assumed that all the gala owners had necessarily complied with the same. D.W. 2 Jariwala has further stated that after 1998, the defendant society as well as the Gala owners, both separately took insurance in respect of the property. What the defendants now do is not relevant and helpful to remedy the breach which was committed in 1976. The statement itself shows that defendants have now realized that it is obligatory on their part to get the buildings insured irrespective of whether the individual gala owners do so or not. There can therefore, be no doubt that the defendants committed breach of the covenant mentioned in Clause 2(h) of the lease deed.
24. In Charushila Dassi v. Madan Theatres Ltd., : AIR1953Cal536 , there was a lease deed dated 19-8-1933 in respect of two cinema theatres which provided that the lessee shall during the period of lease, keep one box, of not less than four seats in each of the cinema house at the disposal of the lessor and if the lessor desired in writing, the lessee shall instead of four seats in the box, permit six persons in the stall and eight persons in the gallery or pit. The lease deed further provided that the lessor shall pay both the owner's and occupier shares at rates and taxes and other outgoings and impositions payable in respect thereof. Thereafter, by West Bengal Amusement Tax (Amendments) Act, 1949, entertainment tax was imposed on all free and complementary passes or tickets. The defendant lessee contended that such entertainment tax in respect of the free seats was payable by the plaintiff lessor and that the only obligation of the lessee was to issue free passes to the lessor in respect of those seats. The High Court however, negatived this contention and held that the lessee did commit breach of its liability under the convenant when it attempted to realize the tax from the lessor. It was held that the seats on the demised premises being part of the demised premises, could legitimately come under the covenant in other clause. As one of the clauses in the lease provided that breach of any condition mentioned in the lease would entitle the lessor to re-enter and as the breach was capable of remedy, the High Court held that forfeiture must follow as a matter of legal consequence. It was observed that under section 114-A of the Transfer of Property Act, the Court has no power to grant any relief against forfeiture, it will thus be seen that the covenant of which breach is committed by the lessee may not be of much importance in comparison to the convenant of payment of rent. It may also sound rather harsh that breach of such a convenant results in forfeiture of the lease entitling the lessor to re-enter upon the demised premises. But it cannot be ignored that the law gives opportunity and time to the lessee to remedy the breach. If the lessee does not avail of that opportunity then he takes the risk of the consequence. There is no protection given to the lessee by the law like the one given to a tenant under the Rent Act.
25. In view of the foregoing discussion, I record my affirmative findings on Issue Nos. 3 and 4 in the affirmative and that on issue Nos. 5 and 6 in the negative.
26. Admittedly at the relevant date the defendants were in arrears of rent of three months i.e. April, May and June 1976. The agreed rent being Rs. 9000/- p.m., the defendants are liable to pay the rent at that rate till the termination of the tenancy i.e. the end of September 1976. It comes to Rs. 54,000/-. Therefore, the plaintiff's claim in this respect will have to be allowed. The plaintiffs have further claimed Rs. 60,000/- towards compensation or damages at the rate of Rs. 15,000/- p.m. for wrongful use and enjoyment of the suit land after the termination of the lease till 31-1-1977. (The suit was filed on 14-1-1977). But I think that the same deserves to be granted at the same rate i.e. Rs. 9000/- p.m. Therefore, the plaintiff will be entitled to get compensation or damages of Rs. 36,000/- only. The defendants have already deposited the amounts in this Court as per the minutes of the order dated 17-3-1977. The plaintiffs have been permitted to withdraw the same. Under section 114, the defendants are liable to pay interest on the arrears of rent. Hence, it will be proper to grant interest at the rate of 9% per annum on both the amounts. Accordingly, I record my finding on Issue No. 7.
27. As regards the future mesne profits from the date of the suit till recovery of possession, it will be proper to direct an inquiry under section 20 Rule 12(c) of the C.P. Code, since no specific evidence in adduced in this respect. Such an inquiry may however, be dispensed with if the plaintiffs are ready to accept the future mesne profits at the rate of Rs. 9000/- p.m.
28. Since the defendants are proved to have committed breach of the express conditions regarding insurance, the plaintiffs have rightly forfeited the lease and become entitle to recover possession of the suit land as described in para 2 of the plaint. The plaintiffs have further prayed for a mandatory injunction requiring the defendants to appoint an architect for the purpose of valuation in accordance with Clause 2(m) of the lease deed. It may be noted that what belongs to the plaintiff's is only the suit land whereas the structures built thereon belong to the gala owners who are members of the defendant's society. Clause 2(m) of the lease deed provides that at the expiration or determination of the lease, the lessee shall deliver to the lessors, the suit land along with the buildings and structures standing thereon. It further provides that the lessor shall pay to the lessee compensation as may be mutually agreed between the parties. It also provides for appointment of architect to make valuation of the buildings and structures on the suit land. In view of this specific clause in the lease deed, the plaintiffs deserve to be granted the reliefs stated in Clause e(i) and e(ii) of the prayer clause. As regards the prayer of declaration made in prayer Clause a(i), I think that it is not necessary to grant the same since the defendants do not dispute or deny the plaintiffs' title as owner of the suit land.
29. Before concluding, it is necessary to point out that as per the lease deed, the lease commenced from 1-3-1971. Under section 106 of the Transfer of Property Act, a lease of immovable property of agricultural land or manufacturing purpose is deemed to lease from year to year terminable by six months notice expiring with the end of the year of tenancy and a lease of immovable property for any other purpose is deemed to be a lease from month to the month terminable by 15 days notice expiring with the end of the month of the tenancy. In the instant case the plaintiffs first served the defendant with a notice dated 13-7-1976, Exhibit P-7, wherein their Advocate pointed out the breaches committed by the defendants and stated 'In the premises our clients have instructed us to give you notice to remedy the aforesaid breaches on or before the expiry of the month next after the current month'. This is not a notice of termination of tenancy under section 106 but a notice under section 114 and 114(a), whereby the defendants were given time to remedy the alleged breaches. Therefore, this notice Exhibit P-7, does not have effect of terminating the lease w.e.f. the end of September, 1976. The plaintiffs Advocate thereafter served the defendants with another notice dated 21-9-1976 Exhibit P-8, wherein he pointed out that the defendants had failed to remedy the breaches and informed 'In the circumstances we are instructed by our clients to give you this notice which we hereby do, that the lease dated 29th July, 1972 stands terminated and our clients have become entitled to re-enter upon the demised premises. You are hereby called upon to forthwith hand over our clients possession of the demised premises'. The lease in question was obviously not for agricultural land purpose. Assuming that it was for manufacturing purpose or any other purpose, in any event, the notice does not comply with the requirements of section 106 since the lease is not terminated with six months notice expiring with the end of the year of tenancy or 15 days notice expiring with the end of a month of the tenancy. The notice after termination, therefore, does not appear to be valid. However, that does not given any benefit to the defendants since it is not contended either in the written statement or in the oral submission that it is invalid.
30. In the result, I pass the following order :---
ORDER
i) The suit is partly decreed with cots on the decreed claim.
ii) The defendants do deliver vacant possession of the suit land to the plaintiffs along with the buildings and structures built on the suit land.
iii) The plaintiffs are given liberty to move this Court for appointment of an architect to make valuation of the buildings and structures standing upon the suit land in accordance with the provisions contained in Clause 2(m) of the lease deed dated 29th July, 1972. The parties will be at liberty to challenge the correctness or otherwise thereof in the inquiry. Thereafter the plaintiffs shall pay to the defendants agreed amount or the amount which may be fixed by the Court regarding valuation of the buildings and structures on the suit land within a period of two months. This decree will be preliminary in this respect and final decree will be passed after inquiry.
iv) The defendants do pay to the plaintiff Rs. 27,000/- being the arrears of rent for the months of default i.e. April, May and June 1976 at the rate of Rs. 9,000/- per month together with interest thereon at the rate of 9% per annum.
v) The defendants do also pay to the plaintiffs Rs. 36,000/- by way of compensation of damages for unauthorised use and occupation of the suit land for the period from 1-10-1976 to 31-1-1977 together with interest at the rate of 9% per annum.
vi) The amounts of rent deposited by the defendants in the Court shall be adjusted towards the payment stated in Clauses (v) & (vi) above.
vii) Inquiry into future mesne profits to be made under section 20, Rule 12(i)(c) of the C.P. Code on plaintiffs' making an application in that behalf.
viii) The suit is dismissed in respect of the prayer of declaration of title.
ix) Decree be drawn accordingly.
Certified copy expedited.
Copy of this order duly authenticated by the Associate of the Court is allowed.