Statutory tenant cannot seek repossession after demolition of building under Transfer of Property Act: Supreme Court

Read Judgment: Abdul Khuddus vs. H.m.Chandiramani (Dead) through Legal Heirs

Pankaj Bajpai

New Delhi, September 21, 2021:The Supreme Court has opined that the statutory tenant cannot seek repossession after the demolition of building u/s 108(B)(e) of the Transfer of Property Act as the rights and liabilities of a statutory tenant have to be found under the Rent Act alone.

A Division Bench of Justice Hemant Gupta and Justice A.S. Bopanna observed that since the premises are situated within the urban areas governed by the Rent Act, the tenant has a right to seek possession only in terms of Section 27 of the Act if the decree for eviction has been passed by a Court on the ground specified under clause (j) of the proviso to Section 21(1).

The background of the case was that a suit was filed by the tenant claiming mandatory injunction and possession after the building he occupiedgot demolished in pursuant to proceedings u/s 322 of the Karnataka Municipal Corporation Act, in addition to a suit claiming damages.

The Trial Court decreed the suit and directed to grant quantified damages and to pay Rs. 10,000/- per month till such time, the possession is handed over to the plaintiff.

Similarly, on appeal, the High Court held that the building in question was demolished in haste and the plaintiff was thus entitled to possession of the building as he was unlawfully dispossessed of the same.

Hence, the plaintiff approached the Apex Court contending that in spite of demolition of the building by the Corporation, the tenancy rights survive as the right of tenancy is not only in building but also in the land.

After considering the arguments, the Division Bench noted that the finding of the High Court that the building was demolished without giving clear three days’ notice is partly correct.

“The notice was served upon the plaintiff on 6.1.1995 and the building was demolished on 9.1.1995. Thus, clear three days’ notice was not served upon the plaintiff. The plaintiff was however aware of the proceedings initiated by the Corporation on the ground that the building in question was in dilapidated condition and unsafe for human inhabitation. The plaintiff had challenged such notice before the High Court. The High Court had given four weeks’ time to the Corporation to pass a speaking order after giving an opportunity of hearing to the plaintiff. The building was inspected by the Deputy Commissioner of the Corporation and opportunity of hearing was granted to the plaintiff as well”, observed the Bench.

Therefore, Justice Gupta said that the present is not a case where there was any sudden development leading to the demolition of the building but the order of demolition was a considerate action passed after the report of the Court Commissioner was submitted before the High Court and the Corporation was given time to finally decide the show cause notice.

The Division Bench found that the respondent purchased the lessor’s interest and the lease continued even thereafter and did not extinguish. Further, the lease was subsisting when the shares of the land were purchased by the respondent. But the interest of the lessee was not purchased by the respondent.

Hence, what has been purchased by the respondent is the right and interest of ownership of the property. The interest of the appellantas lessee has not been vested with the respondent and therefore, the tenancy of the appellant cannot be said to have been determined consequent upon demolition and destruction of the tenanted premises, added the Bench.

Quoting the decision in case of Allahabad Bank v. Canara Bank & Anr, Justice Gupta held that the finding of the High Court that Rent Act would prevail over the Karnataka Municipal Corporation Act is clearly erroneous as both legislations operate in separate distinct spheres having different objectives in mind.

The Top Court observed that once the order was passed by the Corporation and was put on the means of communication, the date of actual receipt of notice is insignificant as the receipt could be delayed by the recipient, though there is no such attempt or finding.

The Court also found that the wife and daughter of the plaintiff had removed the goods including sewing machines etc., hence the damages would include any loss of goods and the machines which were in the tenanted premises in question.

Keeping in view the fact that the building was demolished within three days of the receipt of notice, the Apex Court found it appropriate to order the appellant to compensate the plaintiff with the damages of Rs.5 lakhs which shall be payable to the legal heirs of the deceased plaintiff in accordance with law.