Supreme Court Upholds Demolition of Dilapidated Building, Limits Tenant’s Rights: Abdul Khuddus vs. H.M. Chandiramani (2021)

Introduction

Date of the Judgment: 14 September 2021
Citation: Not Available
Judges: Hemant Gupta, J., A.S. Bopanna, J.
Can a tenant demand the right to re-enter a property after it has been demolished by municipal authorities due to its dilapidated condition? The Supreme Court of India addressed this question in a recent case, clarifying the rights of statutory tenants when faced with municipal demolitions. The Court examined whether a tenant could claim rights under the Transfer of Property Act after the demolition of a building, despite being a statutory tenant under the Rent Act. The judgment was delivered by a two-judge bench comprising Justice Hemant Gupta and Justice A.S. Bopanna.

Case Background

The case revolves around a property in Bangalore where the plaintiff, H.M. Chandiramani, was a tenant since 7 May 1974, under the Karnataka Rent Control Act, 1961. The building, constructed in 1903, was owned by Panduranga Shetty. Over time, the building was sold to multiple owners, with Abdul Khuddus purchasing the front portion on 18 March 1994.

In 1994, the Bangalore City Corporation issued a notice under Section 322 of the Karnataka Municipal Corporations Act, 1976, citing the building’s dilapidated and dangerous condition. The plaintiff challenged this notice in the High Court, which appointed a Court Commissioner to assess the building’s condition. The Commissioner’s report confirmed the poor state of the building, including cracks and water leakage.

The High Court dismissed the plaintiff’s writ petition on 8 December 1994, directing the Corporation to issue a final order within four weeks. The Deputy Commissioner of the Corporation, after inspecting the site, ordered the building’s demolition on 5 January 1995. The order was served on the plaintiff on 6 January 1995, and the building was demolished on 9 January 1995.

The plaintiff filed a suit for permanent injunction on 27 January 1995, which was later amended to include a claim for mandatory injunction and possession. A second suit was filed on 30 October 1995, claiming damages for the loss of machinery, furniture, and business.

Timeline

Course of Proceedings

The plaintiff initially filed a suit for permanent injunction, which was later amended to include a claim for mandatory injunction and possession. The trial court dismissed this suit, finding that the second suit for damages was barred by Order II Rule 2 of the Code of Civil Procedure, 1908. The second suit, which claimed damages for the loss of machinery, furniture, and business, was decreed in favor of the plaintiff.

The High Court, however, reversed the trial court’s decision on the first suit, ruling that the demolition was illegal and that the plaintiff was entitled to possession of a comparable shop. The High Court also upheld the decree in favor of the plaintiff in the second suit for damages. The Corporation and the appellant filed appeals before the Supreme Court against the High Court’s decision.

Legal Framework

The case involves several key legal provisions:

• Section 5 of the Karnataka Rent Control Act, 1961: This section deals with the allotment of premises by the Rent Controller, under which the plaintiff was inducted as a tenant.
• Section 21(1)(j) of the Karnataka Rent Control Act, 1961: This section allows a landlord to seek eviction of a tenant if the premises are required for demolition and erecting a new building.
• Section 27 of the Karnataka Rent Control Act, 1961: This section deals with the tenant’s right to seek possession after an eviction decree on the grounds of demolition for new construction.
• Section 322 of the Karnataka Municipal Corporations Act, 1976: This section empowers the Commissioner to take action against dangerous structures, including ordering their demolition.
  
  “322. Precautions in case of dangerous structures. – (1) If any structure be deemed by the Commissioner to be in a ruinous state or dangerous to passersby or to the occupiers of neighbouring structures, the Commissioner may, by notice require the owner or occupier to fence off, take down, secure or repair such structure so as to prevent any danger therefrom. (2) If immediate action is necessary, the Commissioner may himself, before giving such notice or before the period of notice expires fence off, take down, secure or repair such structure or fence off a part of any street or take such temporary measures as he thinks fit to prevent danger and the cost of doing so shall be recoverable from the owner or occupier in the manner provided in Section 470. (3) If in the Commissioner’s opinion the said structure is imminently dangerous to the inmates thereof, the Commissioner shall order the immediate evacuation thereof and any person disobeying may be removed by any police officer.”
• Section 462 of the Karnataka Municipal Corporations Act, 1976: This section outlines the time for complying with an order and the power to enforce it in default.
  
  “462. Time for complying with order and power to enforce in default. – (1) Whenever by any notice, requisition or order made under this Act or under any rule, bye-law or regulation made under it, any person in required to execute any work, or to take any measures or do anything, a reasonable time shall be named in such notice, requisition or order within which the work shall be executed, the measures taken, or the thing done. (2) If such notice, requisition or order is not complied with within the time so named, then whether or not a fine is provided for such default and whether or not the person in default is liable to punishment or has been prosecuted or sentenced to any punishment for such default, the Commissioner may cause such work to be executed, or may take any measure or do anything which may, in his opinion, be necessary for giving due effect to the notice, requisition or order as aforesaid. (3) If no penalty has been specially provided in this Act for failure to comply with such notice, the said person shall, on conviction, be punished with fine not exceeding fifty rupees for such offence.”
• Order II Rule 2 of the Code of Civil Procedure, 1908: This rule requires a plaintiff to include the whole claim in a suit and prevents subsequent suits for omitted claims.
  
  “2. Suit to include the whole claim. – (1) Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action; but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court. (2) Relinquishment of part of claim .—Where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim, he shall not afterwards sue in respect of the portion so omitted or relinquished. (3) Omission to sue for one of several reliefs .—A person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs; but if he omits, except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue for any relief so omitted.”
• Section 108(B)(e) of the Transfer of Property Act, 1882: This section deals with the rights of a lessee in case of destruction of the leased property, stating that such destruction does not amount to determination of tenancy under Section 111 of the TP Act.

Arguments

The arguments presented before the Supreme Court were as follows:

Appellant’s Arguments (Abdul Khuddus and Bangalore City Corporation)

• The High Court erred in assuming an interim injunction was in place on 15 February 1995, as the building was already demolished on 9 January 1995. The first suit was filed on 27 January 1995, after the demolition.
• The proceedings under the Karnataka Municipal Corporations Act, 1976, were valid as the building was in a dilapidated condition. The Corporation was bound to act on the High Court’s direction to pass a final order within four weeks.
• The order of demolition was served on 6 January 1995, and the building was demolished on 9 January 1995, which was the third day of serving of the said order. Therefore, there was no violation of the High Court’s order nor was the building demolished in haste.
• The plaintiff should have included the claim for damages in the first suit filed on 27 January 1995. The second suit is barred by Order II Rule 2 of the Code of Civil Procedure, 1908.
• The Karnataka Rent Control Act, 1961, is limited to landlord-tenant disputes, whereas the Karnataka Municipal Corporations Act, 1976, is concerned with public safety. The Rent Act does not override the Municipal Act.
• The withdrawal of rent proceedings after the demolition of the building was not an act of collusion. The tenanted portion ceased to exist after demolition, making the relief of ejectment no longer available.
• The notice under Section 462 of the Karnataka Municipal Corporations Act, 1976, was not required as Section 322 of the Act is a self-contained provision.

Respondent’s Arguments (H.M. Chandiramani’s Legal Heirs)

• The demolition order was served on 6 January 1995, at 5:20 PM, and the building was demolished on 9 January 1995, at 9:00 AM. This did not provide a clear three-day notice period for the plaintiff to vacate or seek legal remedy.
• An order under Section 322 of the Karnataka Municipal Corporations Act, 1976, could not be executed without an order under Section 462 of the Act.
• The demolition was high-handed and led to the loss of the premises and business.
• The right of a tenant survives even after the demolition of the tenanted premises, as the right of tenancy extends to the land.
• The High Court correctly held that the demolition was illegal and the plaintiff was entitled to possession of a comparable shop.
• The tenant relied upon Shaha Ratansi Khimji and Sons v. Kumbhar Sons Hotel Private Limited and Ors. [(2014) 14 SCC 1] to argue that the destruction of tenanted property would not amount to determination of tenancy under Section 111 of the TP Act.

Innovativeness of the argument: The respondent’s argument that the right of tenancy extends to the land even after the demolition of the building, relying on Section 108(B)(e) of the Transfer of Property Act, 1882, and the judgment in Shaha Ratansi Khimji and Sons v. Kumbhar Sons Hotel Private Limited and Ors. [(2014) 14 SCC 1], was a novel approach to claim the right to re-enter the premises.

Submissions of Parties

Issues Framed by the Supreme Court

The Supreme Court considered the following issues:

1. Whether the High Court was correct in holding that the demolition of the building was illegal and that the plaintiff was entitled to possession of a comparable shop.
2. Whether the second suit for damages was barred by the provisions of Order II Rule 2 of the Code of Civil Procedure, 1908.
3. Whether the tenant can claim repossession of a demolished building under the Transfer of Property Act, despite being a statutory tenant under the Rent Act.
4. Whether the notice under Section 462 of the Karnataka Municipal Corporations Act, 1976, was required in addition to the notice under Section 322 of the Act.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Cases

Statutes

Judgment

The Supreme Court set aside the High Court’s order, dismissing both suits filed by the plaintiff, subject to the payment of Rs. 5 lakhs as compensation.

The Court held that the High Court erred in finding that the demolition was illegal. The building was demolished by the Corporation due to its dilapidated condition, and the tenant, being a statutory tenant, was governed by the Rent Act, not the Transfer of Property Act. The Court also held that the second suit for damages was barred by Order II Rule 2 of the Code of Civil Procedure, 1908, as the plaintiff should have included the claim for damages in the first suit.

The Court clarified that the rights of a statutory tenant are governed by the Rent Act alone, and the provisions of the Transfer of Property Act do not apply to them. The Court also held that the notice under Section 462 of the Karnataka Municipal Corporations Act, 1976, was not required as Section 322 is a self-contained provision.

The Court observed that the plaintiff was aware of the proceedings initiated by the Corporation and that the demolition was not a sudden development. The Court also noted that the wife and daughter of the plaintiff had removed the goods, including sewing machines, from the premises.

The Court directed the appellant to pay Rs. 5 lakhs as compensation to the legal heirs of the deceased plaintiff within two months.

Ratio Decidendi

The ratio decidendi of the judgment is that a statutory tenant’s rights are governed by the Rent Act and not the Transfer of Property Act. If a building is demolished by municipal authorities due to its dilapidated condition, the tenant cannot claim a right to re-enter the premises under the Transfer of Property Act. The tenant’s remedy lies under the Rent Act, if any. Additionally, the Court emphasized that a single cause of action should be pursued in one suit, and a subsequent suit for omitted claims is barred under Order II Rule 2 of the Code of Civil Procedure, 1908.

Obiter Dicta

The Court made the following obiter dicta:

• The Court observed that the plaintiff was aware of the proceedings initiated by the Corporation, and the demolition was not a sudden development.
• The Court noted that the wife and daughter of the plaintiff had removed the goods, including sewing machines, from the premises, indicating that the plaintiff was aware of the impending demolition.
• The Court emphasized that the Rent Act and the Municipal Act operate in separate spheres, and the Rent Act does not override the Municipal Act when it comes to public safety.

Flowchart of the Decision-Making Process

Conclusion

The Supreme Court’s judgment in Abdul Khuddus vs. H.M. Chandiramani (2021) clarifies the legal position of statutory tenants when faced with municipal demolitions. The Court held that a statutory tenant cannot claim a right to re-enter a demolished building under the Transfer of Property Act. The rights of such tenants are governed solely by the Rent Act. The Court also emphasized the importance of pursuing all claims arising from the same cause of action in a single suit to avoid the bar under Order II Rule 2 of the Code of Civil Procedure, 1908.

This judgment serves as a significant precedent in cases where municipal authorities demolish buildings due to their dilapidated condition. It underscores the distinction between contractual tenants and statutory tenants and clarifies that the rights of statutory tenants are primarily governed by the specific provisions of the applicable Rent Control Act.